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VAT Reconsideration Process

Home / BLOG / UAE Legal Disputes: VAT Reconsideration Process

There has been a notable increase in tax disputes within the UAE, primarily due to the complexity of the VAT system and the Federal Tax Authority’s (FTA) proactive stance against tax evasion and avoidance. It is not uncommon for individuals or businesses to find themselves in disagreement with a decision or assessment made by the local tax authority. In such situations, two avenues are available: requesting a review from the FTA or pursuing an appeal through the UAE court system.

VAT Reconsideration Application

To initiate this process, businesses registered for VAT in the UAE can submit a VAT reconsideration application or appeal within a specific timeframe of 20 days. The provisions related to VAT reconsideration are as follows:

Any taxable entity registered for VAT in the UAE can seek reconsideration from the FTA for any decision issued to them, either partially or in full. This request should include well-founded reasons and must be submitted within twenty days from the date they receive the notification regarding the FTA’s decision.

Upon receiving the reconsideration application, the UAE tax authority will thoroughly review the request and evaluate the decision, provided that all requirements are met. Within twenty-five days of receiving the appeal application, the FTA will issue a well-justified decision and inform the applicant accordingly.

If a taxable entity fails to meet the 20-day deadline for submitting an appeal to the FTA, there might still be an opportunity to file a late appeal by persuading the Tax Dispute Resolution Committee of the FTA to accept the delayed submission. The committee will assess the reasons provided for the delay, although it is important to note that approval for a late filing is not guaranteed. For more detailed information on Tax Disputes, it is advisable to consult the available relevant resources.

Advantages of Initiating a VAT Reconsideration Application with the Federal Tax Authority (FTA) in the UAE

Engaging in the process of submitting a VAT reconsideration application to the Federal Tax Authority (FTA) in the United Arab Emirates (UAE) can yield various benefits. Here are some of the potential advantages:

1. Error Correction: Should you suspect an error in the assessment or calculation of VAT by the FTA, the submission of a reconsideration application empowers you to rectify these errors, ensuring that you neither overpay nor underpay VAT.

2. Dispute Resolution: The reconsideration procedure establishes a formal avenue to resolve disputes with the FTA. In cases where you disagree with their decisions or assessments, the submission of an application enables you to present your case and potentially achieve resolution.

3. Cost-Efficiency: By opting to submit a reconsideration application, you have the opportunity to address inaccuracies or disputes without resorting to formal legal proceedings. This approach can save you valuable time, effort, and potentially costly legal fees.

4. Compliance Assurance: The VAT reconsideration process serves as a means to reinforce compliance with the UAE’s VAT regulations. By engaging with the FTA and resolving any issues, you can demonstrate your commitment to adhering to tax laws and maintaining a favorable standing.

5. Transparency and Clarity: The reconsideration process facilitates transparent communication between you and the FTA. Through the presentation of your case and the provision of supporting documentation, you can help clarify any misunderstandings or discrepancies, leading to a clearer understanding of your VAT obligations.

6. Legal Safeguard: Submission of a reconsideration application to the FTA safeguards your legal rights. It allows you to formally dispute any decisions or assessments that you believe are incorrect, providing a structured framework for addressing such matters.

Filing an Appeal with the Tax Disputes Resolution Committee (TDRC)

If you remain in disagreement with a decision rendered by the Federal Tax Authority (FTA) of the United Arab Emirates, even following a review or request for VAT reconsideration, you retain the option to initiate an appeal before the UAE Tax Disputes Resolution Committee (TDRC). Taxpayer grievances against FTA determinations may be lodged under the following circumstances:

1. Settlement of tax liabilities and penalties,
2. Lodging an application for reconsideration with the FTA, and
3. Registering objections within 20 business days from the date of receiving the FTA’s decision notification.

Before submitting an objection to the TDRC, it is imperative for a taxpayer to first file a reconsideration application with the FTA. The TDRC holds the authority to make determinations regarding objections, even if the FTA has not yet reached a verdict on the reconsideration application. In cases where the cumulative outstanding tax and penalties do not surpass AED 100,000, the TDRC’s ruling stands as the final and enforceable decision. Taxpayers are obliged to direct their objections to the TDRC corresponding to the registered FTA address. For instance, taxpayers registered in Dubai should address the Emirate of Dubai TDRC, whereas those residing in Abu Dhabi should direct their concerns to TDRC Abu Dhabi. This same principle applies to taxpayers located in other emirates as well.

Documents Needed for Objecting to TDRC

When preparing to object to the Tax Dispute Resolution Committee (TDRC), it is imperative to gather and submit the requisite paperwork to bolster your case efficiently. To commence the objection process, you will be obliged to assemble and present the following original documents:

1. Completed Objection Form: Create a comprehensive objection form in both Arabic and English languages. This form should encompass all essential particulars, including your personal or business particulars, contact information, VAT registration number, and a clear statement of the objection. It is imperative to diligently and legibly fill out the form.

2. Explanatory Memorandum: Compose an explanatory memorandum outlining the basis for your objection in the Arabic language. This memorandum serves as an exhaustive elucidation of your dissent from the FTA’s decision.

3. Supporting Documents: Enclose all pertinent supporting documentation to substantiate your objection. These may encompass evidence of the original FTA decision and the previously submitted application for reconsideration. Furthermore, you may include payment receipts for tax penalties or contested liabilities. It is crucial to note that all supporting documents must be provided in the Arabic language.

Count on Dubai Lawyers to Resolve Your VAT/Tax Dispute

If you find yourself entangled in a tax dispute in the UAE, Dubai Lawyers stands ready to assist. Our adept team specializes in VAT reconsideration applications, delivering expert analysis and representation tailored to your specific circumstances. Possessing an in-depth knowledge of UAE tax legislation, we are dedicated to pursuing equitable treatment and achieving optimal outcomes. 

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