FTA, as the regulatory body for VAT in UAE Laws; takes charge of the managing and collecting federal taxes and fines. And having the knowledge of tax laws has its own perks for business organizations and individuals. Due to the numerous situations where the taxpayers are not satisfied with the decision given by the Authority, they always the option for a VAT reconsideration.
Do you believe that your company has been actually not liable to the penalties? Or do you not agree with Federal Tax Authority’s (FTA) decision over your penalties?
If yes, here is all you need to know before filing the reconsideration for your VAT penalties.
A taxpayer who have received a penalty can apply to the FTA for a VAT reconsideration within 20 working days from the date of the receipt of such penalty.
After providing the reason for applying a reconsideration on FTA’s decision which also includes an analysis of the alternative treatment which the applicant consider that should have taken in its case, the Authority will then review the request for reconsideration and, if the applicant has fulfilled all the requirements, a justifies decision by the FTA will be issued within 20 working days from the date of the receipt of such application. The tax Authority can review its decision and give relief to the taxpayer if they can prove the case of the filing by VAT Reconsideration.
Note: The application and its supporting documents should be written in Arabic Language only.
Following are some common circumstances under which a taxpayer can induce VAT penalties in the UAE:
- Late Registration for VAT
- Late Deregistration
- Failure to file VAT Returns within the time and not making the payment on time
- Submission of wrong documents or incorrect information
- No proper records
What happens if the taxpayer is not satisfied with the reconsidered decision?
In spite of FTA’s multiple levels of control on accessing the case and then levying the penalty, it allows the taxpayer to apply for reconsideration if he/she is not satisfied with its decisions. In cases like this, FTA has a clear policy regarding reconsideration applications. So, to do full justice to the taxable person and provide a chance by accepting to reconsider the decision made.
Level 1: Reconsideration form
The first step in the process of VAT Reconsideration in UAE is to urge the FTA to reconsider its decision. The corporation is expected to file the reconsideration form within 20 business days of the date of the initial FTA decision. The FTA will also be expected to respond to the reconsideration request and deliver a revised decision within 20 business days.
Level 2: Tax Dispute Resolution Committee
In the case that a taxable person is not compliant with the amended ruling, he may use his right to appeal to the Committee to Resolve Tax Disputes. The proposal must be made within 20 business days of FTA’s amended statement. The Committee for Settlement of Tax Disputes shall then respond to the complaint within 20 business days.
Level 3: Federal Court Litigation (only if the disputed amount is more than AED 100,000)
If the taxed person is not happy with the verdict of the Tax Disputes
Settlement Committee, then he has the right to bring an appeal before the competent court. The trial is where the decision sits unchallenged. The appeal must be lodged within 20 working days after the verdict of the Tax Disputes Settlement Committee is transmitted.
If you have any queries regarding VAT Reconsideration in UAE, AM Audit can help you to file the reconsideration request to review FTA’s decision.