In 2022, the United Arab Emirates (“UAE”) issued Federal Decree-Law No. 28 of 2022 on Tax Procedures (“TPL”). Here, a new optional mechanism was provided for disputing tax assessments and penalties before the Federal Tax Authority (“FTA”), known as ‘Tax Assessment Review Request’ (“TA Reviews”). Following this, recently, a Public Clarification on TA Reviews was issued by FTA, further explaining the instances where a person may request a TA Review. In general, recourse to TA Reviews is appropriate only in specific circumstances. This briefing explores the concept of TA Review, the circumstances under which it may be utilized, the timelines, and the options available after exhaustion of this remedy.
1. What is the TA Review facility provided for in the TPL?
TA Reviews were introduced under the TPL in 2022 to allow for an additional grievance redressal mechanism before the FTA. This mechanism was not available in the erstwhile tax procedures regime. Previously, the only option available to a person (whether natural or juridical) redressing a (part of a) tax assessment or any related administrative penalty (“Assessment”) by FTA was to file for reconsideration.
Since 2023, persons have the additional recourse available to challenge the Assessment, in the form of a TA Review. In this regard, the FTA recently published a Public Clarification, providing comprehensive details on the TA Review conditions and processes (Tax Procedures Public Clarification TAXP008 (“Clarification”)).
The TA Review may be filed if the person can prove that the FTA did not follow the correct procedures or made an error in determining the tax assessment based on information given during the tax audit.
As per the Clarification, the term “during the tax audit” refers to the period starting from the date the person receives the tax audit notification until the date the tax assessment and administrative penalty assessment are issued.
To ensure transparency in operations, TA Reviews are decided by FTA’s officials independent from the team that conducted the tax audit.
2. What can be grounds for filing a TA Review?
The Clarification states that the TA Review may be filed if the person has reasonable grounds to believe that there are:
- Technical errors relating to the incorrect application of the relevant tax legislation or treaty; or
- Calculation errors or errors in the audit procedures which led to an incorrect determination of tax differences and administrative penalties.
Some examples where a TA Review is considered a viable option include as per the Clarification:
- Where the FTA notifies a tax audit after the expiration of the statute of limitation;
- Where FTA fails to notify a tax audit prior to conducting the tax audit and issuing the tax assessment;
- Where the person believes that the FTA relied on undocumented or uncertified confirmations by external parties;
- Where the person believes that the FTA failed to request information that could impact the validity of the tax audit findings;
- Where the person believes that the FTA erroneously determined the value of a supply;
- Where the person believes that the estimates used for the Assessments were incorrect;
- Cases involving calculation errors; or
- Failure of the FTA to send the tax audit results to the person’s registered address.
Upon examining the TA Review, the FTA may either reject the request, make an adjustment to the Assessment, or uphold the Assessment entirely.
3. By when and how can a TA Review be filed?
The TA Review must be filed within 40 business days of being notified of the Assessment (with the possibility of the FTA approving an extension with valid reasons). TA Review requests may currently be submitted to
AssessmentReview@tax.gov.ae.
Following that, the FTA is required to review and decide within another 40 business days and inform the person within 5 business days therefrom.
4. If a person is not satisfied with the decision in a TA Review, what are the options available?
After exhaustion of the TA Review remedy, the person may file a reconsideration request in the following cases:
- If the person disagrees with the decision of the FTA; or
- If the FTA does not issue a decision within the prescribed timelines (generally, 40 business days).
At this stage, the person may submit any additional information that was not available during the tax audit.
If the person wishes to introduce new information or additional documentary evidence that was not presented to the FTA auditors, the person shall directly apply for reconsideration, skipping the TA Review process.
If the person is still not satisfied with the reconsideration, an objection may be filed before the Tax Disputes Resolution Committee (“TDRC”). Here, the decision of the TDRC shall be final if the amount of due tax and administrative penalties does not exceed AED 100,000 (approx. EUR 25,000).
Finally, if the amount in dispute is more than AED 100,000, the person may approach the Federal Court.
5. Outlook and Conclusion
The TA Review process was added to give the person an additional layer of dispute resolution. The independence of the officer examining the TA Review is indeed a welcome move, because it allows the case to be reexamined having the same evidence but with a fresh pair of eyes.
This does not harm the person, because if unsatisfied with the decision of TA Review (or lack thereof), they are still entitled to file for reconsideration, which they were also entitled to before. At the same time, the burden of proof on the person seeking relief through TA Review is much higher, as it is upon them to prove that the FTA did not follow the necessary protocols or erred in making their Assessment based on the information provided during audit.
Looking at the examples provided in the Clarification for the applicability of TA Review, it seems that the intention is that ‘glaring’ (procedural) omissions are majorly sought to be captured and rectified by the FTA without the need for escalating the case to reconsideration. Simultaneously, persons also get the opportunity to present cases involving calculation and valuation before an independent officer. Perhaps for relatively simpler issues, this may allow for a lesser workload at the higher levels of tax dispute resolution in the UAE.
Dr. Constantin Frank-Fahle, LL.M.
Founding Partner
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