Everything You Must Know About New Amendments to UAE Tax Procedures Law

The procedures of VAT in the UAE are regulated by Federal Law No 17 on Tax Procedures, also known as the Tax Procedures Law. However, the UAE government has introduced the Federal Decree-Law No. 28 of 2021 to amend certain procedures stated in the Tax Procedures Law. Since the new changes have taken effect from November 1st of 2021, taxable persons in the UAE are required to understand the key changes before taking any action related to VAT. Businesses can seek advice from VAT consultants in Dubai for an in-depth understanding of the changes in the Tax Procedures Law.

The new changes cover aspects including the mechanism and requirements for objection and appeal by taxpayers; Alternative mechanism for objection and appeal by Government entities; and mechanism of waiving, refunding and payment of administrative penalties as instalments. In order to help the UAE taxpayers, the Federal Tax Authority (FTA) has also issued a Public Clarification (TAXP003) detailing the major changes and necessary actions to be taken. Further legal assistance can be provided by tax agents in Dubai, UAE.

Read ahead to know further about the changes implemented by the government to certain provisions of the UAE Tax Procedures Law:

1. Amendments to Application for VAT Reconsideration

As per the previous provisions of the Tax Procedures Law, businesses were required to apply for VAT reconsideration in the UAE within 20 business days from the date the person was notified of the decision. As per Article 27 (1) of the Federal Decree-Law No. 28 of 2021, businesses now need to apply for tax reconsideration within 40 business days it was notified of the FTA’s decision in connection with the taxable person. VAT consultants in Dubai can help the entities file an objection as per the new changes.

2. Changes in Issuing the Reconsideration Decision

Earlier, the FTA used to issue its decision on tax reconsideration within 20 business days from the date of receiving the application. As per Article 27 (2) of the amended law, the FTA will issue its decision within 40 business days from the date of receiving the application. More details can be gained from tax agents in Dubai.

3. Objecting to the Tax Disputes Resolution Committee              

Taxable persons were allowed to file an objection to the reconsideration decision within 20 business days from the date of being notified of the reconsideration decision. Businesses now get more time to file an objection as per Article 30 (1) of the Federal Decree-Law No. 28 of 2021. They can now file an objection to the reconsideration decision with the Tax Disputes Resolution Committee (TDRC) within 40 business days from the date of being notified of the reconsideration decision. Consult with tax agents in Dubai to navigate the process of objecting to the TDRC decision.

4. Requirement to Settle Penalties with Tax Disputes Resolution Committee

Taxable persons were earlier required to settle all the outstanding taxes and penalties before becoming eligible for filing an objection with the TDRC. With the new amendments, they are allowed to apply for objection with the TDRC despite not settling the penalties as long as the full amount of tax has been settled, as well as all other conditions are met.

5. The requirement to Settle Penalties – Competent Court

Businesses are allowed to challenge the decision on tax reconsideration by filing a case with a competent court in the UAE. Even then, the taxable persons were required to settle all the outstanding taxes and penalties before becoming eligible to raise an objection. As per the amended law, taxable persons are now required to submit, among others, proof showing:

a) The full amount of tax, as determined by the decision being challenged, was paid.

b) At least 50% of the penalties, as determined by the decision being challenged, was settled.

Taxable businesses need to be meticulous in presenting the mandatory documentary evidence before a competent court. VAT consultants in Dubai can help the taxable persons in ensuring full compliance regarding the documents.

6. Penalty Instalment, Waiver, and Refund

The FTA has scrapped the committee that used to review the excuses and evidence regarding the penalty waiver applications. The Authority will authorise a new committee to approve the payment of Penalties in instalments and waive or refund penalties in full or in part. As per Tax Procedures Public Clarification, the Cabinet will soon issue a decision detailing the controls and procedures based on which a new committee may approve payment of Penalties by instalments or full. Consult with VAT consultants in Dubai for more updates on this decision.

Consult with the Best VAT Consultants in Dubai, UAE

The amendments to the UAE Tax Procedures Law has been welcomed by the business community for their progressive take on the procedures related to VAT, especially tax reconsideration. However, procedures related to VAT reconsideration and other tax processes need to be navigated carefully. Businesses may incur more fines if such procedures are executed wrongly. Fortunately, the advice of VAT consultants in Dubai, such as Jitendra Chartered Accountants (JCA), can be of immense help to businesses.

JCA is one of the leading providers of VAT consultancy services in Dubai, boasting of a big team and reputed clients. JCA has more than 20 years of experience in serving the requirements of businesses in the UAE. Unlike most tax consultants, we take pride in being approved tax agents in Dubai. Our VAT consultancy services in Dubai include VAT assessment, VAT return filing, VAT registration, VAT de-registration, VAT reconsideration, VAT penalty appeal services etc.