Tax Dispute Resolution Services in UAE
Federal taxation is vital for a nation’s betterment, relying on residents’ tax contributions to fund essential government initiatives. In the UAE, the federal tax authority introduced the Value Added Tax (VAT) in 2018, becoming mandatory for all residents.
Incorporating corporate tax at the federal level holds great promise for the UAE. It strengthens the national budget, enabling funding for critical public services, infrastructure, and social programs. Corporate taxation also has the potential to create a more favorable economic landscape by attracting foreign investments, stimulating growth, and fostering entrepreneurship. This leads to job creation, improved living standards, and an overall better quality of life.
In summary, UAE’s federal taxation system, including VAT and corporate tax, is pivotal for societal advancement and economic development. It reflects the government’s commitment to financial responsibility while promoting prosperity and well-being for its people.
Tax Procedures Law
For the conduction of audits, determining tax evasion, ordering penalties etc., the tax procedure laws have been established. Because of tax procedure law, it will become easier for the UAE’s government to review the tax proceedings of the companies. This law provides an outline to the people and to the government to make sure that all the people comply with the rules and regulations made by the federal tax authority.
The main duty of the federal tax authority (FTA)is to carry out the tax audits. For this purpose, expert and fluent Arabic and English speakers have hired in order to conduct the audit process in an expert manner. It is noted here that the audit can perform on anyone by FTA. It is not necessary for the person to hold a registration number for the audit. The basic reason behind the audit is to check whether or not the people are complying with federal tax law or not.
At least 5 days before conducting the audit, the FTA informs the person or the company. If FTA wants, it can close the business for up to 72 hours. The business is close so that nothing may hinder the process of conducting the audit. Note that the business cannot closed until or unless the Director General of the FTA approves of the closure. Also, the business closure can be extended from 72 hours as well if the public prosecutor approves of it.
What happens during the tax audit?FTA obtains the original records or the copies of it for conducting the audit. FTA also has the authority to seize the business or the company. It can take stocks and can conduct experiments on the stock as well. The audited person and their tax agents may be present at the situation when the audit is being carried out. During the audit, all the tax procedures are kept into consideration in order to make sure that everything is going according to the laws and orders set by FTA. So, the people must take care of the fact that when FTA asks them about their records, they have to present them in front of them no matter what.
FTA assesses the following events;
- Firstly, If the person registered or not
- Secondly, If the person pays the tax or not
- And, if the person submits the tax returns or not
- Moreover, If the person submits the incorrect tax returns or not
- If there is any tax evasion or shortfall in payment or not
Those who do not pay tax or may shortfall in any of the tax assessments may be issued penalties by FTA. Further, Administrative penalties may be of AED 500. The penalty may not be more than 3 times the amount of unpaid tax. However, If the penalty is stricter, it may be 5 times of the amount of unpaid tax.
Request for Reconsideration
If any person thinks that the decision taken by FTA has unfair or there were any pitfalls in the decision taken, they may apply for reconsideration. For this purpose, all that the person needs to do is to file an application for the sake of consideration within 5 days of the decisions. The decision made within 20 days of application and then the applicant informed within 5 days of the decision.
Tax Disputes Resolution Committee (TDRC)
Tax Disputes Resolution Committee (TDRC) requested for reviewing the decision. The review carried out within 20 days. The Tax Disputes Resolution Committee is outside the Ministry of Finance. It is under the jurisdiction of the Cabinet and the Ministry of Justice
If the amount by TDRC is less than AED 100,000, it is to be considered final but for the amount greater than that can be appealed to the federal court. Further, the application for judicial appeal should be filed within 20 days of the decision of TDRC. The decision then filed will be considered final and will not be proceeded any further.
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