Navigating the New Tax Assessment Review Mechanism in the UAE

Navigating the New Tax Assessment Review Mechanism in the UAE

Federal Decree-Law No. 28 of 2022 on Tax Procedures has introduced an innovative optional mechanism, empowering taxpayers to dispute tax assessments and related penalties before filing a formal reconsideration request. This amendment aims to simplify dispute resolution, ensuring a fairer and more transparent process for individuals and businesses.

The latest Tax Procedures Public Clarification highlights the applicability of this mechanism and outlines key scenarios for its use. By leveraging this streamlined approach, taxpayers can address concerns more effectively and maintain compliance with the UAE's tax regulations

Summary:

The tax assessment review mechanism allows individuals to request an independent review of a tax assessment or related administrative penalties by FTA officials not involved in the original audit. This process is based on facts, evidence, and audit procedures. It applies when errors in tax calculations, incorrect application of tax laws, or procedural mistakes are suspected. However, if new evidence is to be introduced, reconsideration, rather than a tax assessment review, is the appropriate channel.

Tax Assessment Review Request

A person can request a review of a tax assessment and related penalties if they can prove errors or procedural violations by the Federal Tax Authority (FTA). This applies during the tax audit period, starting from the audit notification until the issuance of the assessment and penalties.

Key Points:

• Eligibility: Errors in tax calculation, audit procedures, or reliance on incorrect data/documents.

• Timeline: Submit the request to the FTA within 40 business days of receiving the assessment notification. Extensions may be requested for valid reasons.

• Exclusions: Reviews cannot be filed for cases already under reconsideration.

Examples of Valid Cases:

• Late audit notifications beyond the 5-year statute of limitations.

• Tax assessments issued for unnotified periods.

• Errors in tax treatment, calculations, or reliance on uncertified data.

• Failure by the FTA to request critical information or notify the audit results.

If a person cannot submit the tax assessment review request within 40 business days, they may ask the FTA for a deadline extension, provided they have valid reasons for the delay.

If the person submits the tax assessment review request within the prescribed period, the FTA will review the request and the reasons provided and issue a decision within 40 business days of receiving the request unless the FTA notifies the person that additional time is required.

The FTA may take the following actions:

• Reject the request: This may occur if procedural requirements are not met, such as failing to submit the request within 40 business days of receiving the tax assessment and administrative penalties notification or presenting new information during the review process.

• Amend the assessment: The FTA may adjust the previously issued tax assessment and, where applicable, the associated administrative penalties.

• Uphold the assessment: The FTA may confirm the previously issued tax assessment and related penalties.

The FTA will inform the applicant of its decision within five business days from the date the decision is issued.

If the person disagrees with the outcome of the tax assessment review or if a decision is not issued within 40 business days (or a longer period if notified of an extension), the person may submit a reconsideration request.

Reconsideration Request

A person may opt to bypass the tax assessment review process and directly submit a reconsideration request if they wish to dispute the tax assessment and related penalties.

A reconsideration request can only be submitted if the person has already filed a tax assessment review request and meets one of the following conditions:

• They have received a decision on the tax assessment review but disagree with the outcome.

• The FTA has not issued a decision on the review request within the prescribed period (40 business days or the extended period, if applicable).

During the reconsideration process, the person may provide additional information or documentary evidence that was unavailable during the tax audit.

Conclusion

Navigating tax assessments and related procedures can be complex and time-sensitive. Understanding your rights and obligations, as well as the processes outlined by the Federal Tax Authority (FTA), is crucial to resolving tax disputes effectively. Whether through submitting a tax assessment review request or pursuing a reconsideration request, each step provides an opportunity to ensure accuracy and fairness in the evaluation of your tax liabilities.

At ALWAHAT Accounts and Internal Audit Services, we specialize in assisting businesses and individuals with tax-related matters, ensuring compliance with UAE tax laws while safeguarding your financial interests. Our team of experts is here to guide you through the intricate processes of tax audits, reviews, and reconsideration requests, providing personalized support and professional expertise.