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Document Type: PC - Public Clarification
Guidance Code: TAXP008
Year: 2024
Related Law: uae-cit-fdl-47-of-2022
Authority: Federal Tax Authority

Tax Assessment Reviews - TAXP008

TAXP008 - Tax Assessment Reviews

TAXP008

Tax Procedures Public Clarification

Tax Assessment Reviews

Issue

Federal Decree-Law No. 28 of 2022 on Tax Procedures and its amendments (“Tax Procedures Law”) introduced a new optional mechanism for persons to dispute tax assessments and related administrative penalties, before submitting a request for reconsideration.

This Public Clarification clarifies the instances in which a person may submit a request for a tax assessment review.

Summary

The purpose of the tax assessment review is to provide a process whereby a person can request a review of the tax assessment (or part thereof) as well as the related administrative penalties assessment [1] by independent FTA’s officials (i.e. FTA’s officials that were not part of the team that conducted the tax audit) based on the facts and evidence provided by the person as well as the audit procedures conducted during the audit by the FTA.

A person can request a tax assessment review if the person has reasonable grounds to believe that there were technical errors relating to the incorrect application of the relevant tax legislation or tax treaties, calculation errors or errors in audit procedures that led to an incorrect determination of tax differences and administrative penalties.

If the person wishes to introduce new information or additional documentary evidence/facts that were not presented to the FTA auditors during the audit process, the tax assessment review mechanism is not the appropriate dispute channel. In such instances, the person may apply for reconsideration.

Detailed analysis

Tax Assessment Review Request

A person may submit a request for the review of a tax assessment and the related administrative penalties assessment if the person can prove that the FTA did not follow the correct procedures or made an error in determining the amount of the tax assessment (and administrative penalties assessment, where applicable) based on the information and documents the person made available to the relevant tax auditors “during the tax audit”.

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.

If a person wants to request a tax assessment review, the request (including reasons for the request) must be submitted to the FTA within 40 business days from the date the person is notified of the tax assessment and related administrative penalties. [2]

It is not permitted to submit a tax assessment review request in respect of which the person already applied for reconsideration. [3]

The following are examples of instances where a person can apply for a tax assessment review, provided the request is submitted within the prescribed period:

  • Issuance of tax audit notifications for prescribed periods, e.g. issuing a tax assessment covering a 2018 tax period, however, the registrant was notified of the audit during 2024. According to the general statute of limitation rule, the FTA may not conduct a tax audit after the expiration of 5 years from the end of the relevant tax period. [4]

  • Failure to notify the person of a tax audit prior to conducting the tax audit, and issuing a tax assessment.

  • The person believes that the FTA depended/relied on undocumented/ uncertified confirmations by external parties in order to determine the value of the person’s taxable supplies, on the basis of which the tax assessment was issued.

  • The person believes that the FTA failed to send a request for information, data or other supporting evidence, that could impact on the validity of the tax audit findings.

  • The person believes that there were errors in determining the value of a supply.

  • The person believes that there were errors in the mechanism used in calculating the excess inventory for Excise Tax purposes.

  • The person believes that the issuance of estimated tax assessments was based on an incorrect estimation basis.

  • The person believes that there are calculation errors in accounting for/calculating the due tax.

  • The person believes that there were errors in the tax treatment of a transaction due to incomplete tax audit procedures or disregarding documents provided during the tax audit period.

  • The person believes that the issuance of a tax assessment was for tax periods not covered in the tax audit notification.

  • The person believes that the FTA failed to send the tax audit results to the person’s registered address.

If the person is unable to submit the tax assessment review request within 40 business days, the person may request the FTA to extend the deadline for submitting the request, provided the person has valid reasons for not being able to meet the deadline for submission. [5]

A tax assessment review request may be submitted to the following email address:

AssessmentReview@tax.gov.ae

Review of the tax assessment

If the person submitted the tax assessment review request within the prescribed period, the FTA shall consider the request and reasons provided by the person, and issue a decision within 40 business days from receiving the request, [6] unless the FTA notified the person that a longer period is needed to make the decision. [7]

The FTA may decide to:

  • Reject the request if the procedural requirements are not met, e.g. if the request was not submitted within 40 business days after the person was notified of the tax assessment and administrative penalties assessment, or where new information was presented.

  • Adjust the previously issued tax assessment (and related administrative penalties assessment, where applicable),

  • Uphold the previously issued tax assessment (and related administrative penalties assessment, where applicable).

The FTA shall inform the applicant of the decision within 5 business days from the date the decision is issued. [6]

If the person does not agree with the outcome of the tax assessment review, or if the decision is not issued within 40 business days (or a longer period where the person is notified of an extension), the person may submit a reconsideration request. [8]

Reconsideration request

A person may opt to forego the option to request a tax assessment review and submit a reconsideration request if the person wants to dispute the tax assessment and related administrative penalties assessment.

The person may only submit a reconsideration request if that person already submitted a tax assessment review request after any of the following: [9]

  • The person received the tax assessment review decision and disagrees with the outcome, or

  • The FTA did not issue a decision on the matter within the prescribed period i.e. within 40 business days from the date the person submitted the request for a tax assessment review (or a longer period where the person is notified of an extension).

As part of the reconsideration process, the person may submit additional information and documentary evidence that were not available during the tax audit.

This Public Clarification issued by the FTA is meant to clarify certain aspects related to the implementation of the Federal Decree-Law No. 28 of 2022 on Tax Procedures and its amendments and Cabinet Decision No. 74 of 2023 on the Executive Regulation of Federal Decree-Law No. 28 of 2022 on Tax Procedures.

This Public Clarification states the position of the FTA and neither amends nor seeks to amend any provision of the aforementioned legislation. Therefore, it is effective as of the date of implementation of the relevant legislation, unless stated otherwise.

Legislative References:

In this clarification, Federal Decree-Law No. 28 of 2022 on Tax Procedures and its amendments is referred to as “Tax Procedures Law” and Cabinet Decision No. 74 of 2023 on the Executive Regulation of Federal Decree-Law No. 28 of 2022 on Tax Procedures is referred to as “Tax Procedures Executive Regulation”.

Footnotes

[1] Article 28(1) of the Tax Procedures Law states that, without prejudice to the provisions of Article 29 of this Decree-Law, a person may submit a request to the Authority to review a tax assessment or part thereof and any related administrative penalties.

[2] Article 28(2) of the Tax Procedures Law states that the request made under Clause 1 of this Article shall specify the reasons for the request and be made within (40) forty business days from the date the person is notified of the tax assessment and the related administrative penalties.

[3] Article 28(5) of the Tax Procedures Law states that it shall not be permissible to submit a request for a tax assessment review or continue to consider it in respect of which a reconsideration request has already been filed.

[4] Article 46(1) of the Tax Procedures Law states that, except in cases under Clauses 2, 3, 6 and 7 of this Article, the Authority may not conduct a tax audit or issue a tax assessment to a taxable person after the expiration of (5) five years from the end of the relevant tax period.

[5] Article 25(3) of the Tax Procedures Executive Regulation states that the Authority may, at the request of the persons concerned, extend the deadline for accepting the submission of a tax assessment review request or a reconsideration request, in the cases deemed appropriate by the Authority.

[6] Article 28(3) of the Tax Procedures Law states that the Authority shall review the request made under Clause 1 of this Article and issue a decision within (40) forty business days from the date of receiving such request, and inform the applicant of the decision within (5) five business days from the date of issuance of the decision.

[7] Article 35(1) of the Tax Procedures Law states that the Authority or the Committee, as the case may be, may for any of the reasons specified in the Executive Regulation extend any of the periods specified in Clause 3 of Article 28, Clause 2 of Article 29 and Clause 1 of Article 33 of this Decree-Law for a period specified in Executive Regulation.

[8] Article 28(4) of the Tax Procedures Law states that the person may submit a reconsideration request pursuant to Article 29 of this Decree-Law in respect of the decision issued under Clause 3 of this Article within (40) forty business days from the date the person is notified of the decision in accordance with Clause 3 of this Article or the expiration of the timeframe within which the Authority is required to issue and notify the applicant of the decision.

[9] Article 29(3) of the Tax Procedures Law states that it shall not be permissible to submit a request for reconsideration of a tax assessment if a request for review is submitted to the Authority in this regard until a decision is issued by the Authority or the expiry of the period during which the Authority must issue a decision on the request and inform the applicant of it, in accordance with Articles 28 and 35 of this Decree-Law.