UAE VAT Update: FTA releases update on seeking VAT clarifications
The UAE Federal Tax Authority recently published a guide on Clarifications.
The FTA has set up a mechanism to provide written guidance on the FTA’s interpretation and position on specific tax matters of uncertainty. Any person may seek a clarification from the FTA on tax matters, provided that such person has analysed the tax law, regulations and the guidance issued by the FTA and the uncertainty on tax treatment continues to exist. Persons seeking a Clarification must have an interest in the matter on which clarity is sought.
This is a welcoming move by the FTA as it provides opportunity to taxpayers to obtain legally binding clarifications on tax treatments.
Procedure for seeking Clarifications:
- Clarification requests can be made to the FTA by completing the clarifications form available here and e-mailing a signed copy in PDF format along with supporting documents to firstname.lastname@example.org
- The FTA may take up to 40 business days to respond to the completed clarification request. The response will be issued in a letter format and will be sent as an attachment to an e-mail.
- In case the clarification issued by the FTA is not agreeable, an application may be made for reconsideration of the decision. The reconsideration application is to be made within 20 business days from the date of receipt of the initial clarification providing reasons for seeking reconsideration. The Reconsideration form may also include an analysis of the alternative treatment which is to be considered by the FTA.
- The FTA will review the request for Reconsideration and, if the application has fulfilled the requirements, issue its justified decision within 20 business days from receipt of such application.
Effect of Clarifications:
- The clarifications issued by the FTA is applicable only to the applicant seeking such clarification and is not to be treated as a decision of the FTA, or as a precedent applicable to all taxpayers.
- The clarifications are applicable only to the specific transactions on which advice was sought and will not be applicable to materially different transactions carried out by the same applicant.
- Not following the advice given by the FTA could lead to a violation of the tax legislation and the issuance of penalties.
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