UAE VAT Updates – Amendments to the Tax Procedures Law effective from 1st November 2021
The UAE Cabinet issued Federal Decree-Law No. 28 of 2021 on 16 September 2021 that amends some of the provisions of Federal Law No. 7 of 2017 on Tax Procedures (Tax Procedures Law). The amendments are effective from 1st November 2021.
I. Extended timeline
The timeline has been increased from 20 to 40 business days for the following:
- Submitting a Reconsideration application to the Federal Tax Authority (FTA). Consequently, the timeline has also been extended for the FTA to review and issue a decision on a reconsideration request.
- Submitting Objections to the Tax Dispute Resolution Committee (TDRC) regarding the FTA’s decision on a reconsideration request.
- Submitting Appeals to the Competent Courts on TDRC’s decision for disputes exceeding AED 100,000
The extension of the timeline provides additional time to adequately consider adopting appropriate strategies and build a strong case before pursuing tax disputes.
II. Admissibility of Objections before TDRC
For an Objection to be admissible before the TDRC, the taxpayer is now required to settle only the tax amount instead of settling the tax amount, along with the administrative penalties.
This amendment will ease the financial burden of the taxpayers and help to manage the cashflows.
III. Enforcement of TDRC’s Decisions
The final decisions issued by the TDRC shall be deemed as executory instruments for disputes below AED 100,000. However, for disputes exceeding AED 100,000, the final decisions issued by the TDRC shall be deemed as executory instruments if these are not appealed before the Competent Court within 40 business days from the date of notification of the outcome of the objection.
The final decisions of the TDRC that have the power of executory instruments shall be enforced through the execution judge at the Competent Court according to the provisions of the Federal Law No. 11 of 1992.
IV. Special Provision for Objection and Appeal
The Cabinet is yet to issue a decision to adopt an alternative mechanism of objection and appeal if the parties to the dispute are any of the federal or local government entities specified in that decision.
However, until the release of such a decision, the provisions of the amended Tax Procedures Law shall apply to tax disputes of federal and local government entities.
V. Court Appeals
To file an appeal before the Competent Courts, along with the proof of payment of tax it is mandatory to provide proof of payment of at least 50% of the amount of the administrative penalties as decided by the TDRC or as ruled by the court. The payments should be processed in cash or via bank guarantee. The Cabinet may reduce the percentage further.
VI. Controls for Paying by Instalment, Waiving, or Refunding Administrative Penalties
The chairman of the Board of the FTA shall form a Committee that may grant the installment process or waive the penalties in full or partially, according to the controls and procedures issued in the Cabinet decision.
HOW CAN WE HELP?
Rethink as an entity provides VAT advisory, optimization, registration, implementation, compliance, and training services in UAE, Bahrain, KSA, and the GCC.
Our team of senior qualified tax advisors, finance experts, and tax accountants are happy to provide practical help and advice, to ensure timely and cost-effective VAT services.
Based on our local and international experience, we understand that VAT is a complex tax and would certainly suffer numerous changes in the upcoming years. Rethink’s VAT services are aimed to suit both basic and complex returns for SMEs and larger enterprises.
WHO ARE WE?
Re/think is a boutique accounting, audit, advisory, regulatory compliance, and tax advisory firm with offices in Dubai and Abu Dhabi (ADGM) focused on providing businesses of varying sizes with timely, proactive, and customized business solutions from start-up and early development to the latest stages of a business lifecycle.