In detail
Legislative background
Initially published in 2022, the Tax Procedures Law (Federal Decree-Law No. 28 of 2022 and its amendments) introduced a new, optional mechanism whereby taxpayers could dispute any tax assessment carried out by the FTA (or part therefore) and any associated penalty levied by requesting a review by independent FTA officials (i.e., those who were not part of the initial audit) ("Tax Assessment Review").
Tax Assessment Reviews
A taxpayer can request a Tax Assessment Review to dispute any finding by the FTA if they have reasonable grounds to believe that there were technical errors causing the incorrect application of the relevant tax legislation or double tax treaty, or if they believe there were calculation errors in the audit procedure.
This is contrasted with the scenario where new evidence has come to light, and in this case a Tax Assessment Review is not the appropriate avenue for taxpayers to seek redress. Instead, a request for reconsideration of the decision by independent FTA auditors is more appropriate.
What has changed?
The new Public Clarification document published by the FTA on 13 November 2024 provides helpful, detailed guidance on the procedure to be followed if a taxpayer wants to request a Tax Assessment Review by independent FTA officials.
Who can submit a request?
A taxpayer may submit a request for Tax Assessment Review only where they can provide evidence that the FTA did not follow the correct procedures "during the tax audit", or made a calculation error in determining the amount of tax due. The reference "during the tax audit" means the period beginning with the taxpayer's receipt of the audit notification until the date that the tax and penalty assessment is issued. If a reconsideration has been submitted to the FTA, a taxpayer is no longer eligible to submit a Tax Assessment Review.
All Tax Assessment Review requests should be submitted to:
AssessmentReview@tax.gov.ae
Time Limits
The request for a Tax Assessment Review (including all evidential documentation) must be submitted to the FTA within 40 business days from the date of the tax and penalty assessment. If a taxpayer cannot meet this deadline, they may request an extension from the FTA, providing valid reasons for the delay.
Examples
As part of the Public Clarification TAXP008 document, the FTA has provided examples of when a taxpayer may request a review, including but not limited to:
- Where the taxpayer believes the FTA failed to notify them of an audit, but issued a tax and penalty assessment
- Where the taxpayer believes the FTA conducted an audit in breach of the statute of limitation rule (i.e., more than five years after the relevant period)
- Where the taxpayer believes there are calculation errors in accounting for the tax due, or
- Where the taxpayer believes there were errors in calculating the value of the supply.
Possible Outcomes
Upon receipt of a valid request for a Tax Assessment Review, the FTA has 40 business days from receiving the request (unless it notifies the taxpayers that further time is required) to issue a decision. The FTA should notify the taxpayer within five business days from the date of making its decision. The FTA may decide to:
- Reject the request if the procedural requirements outlined above for requesting a review are not met
- Adjust the previously issued tax assessment and associated penalties, or
- Uphold the previously issued tax assessment and associated penalties.
If the taxpayer does not agree with the FTA's decision, they may submit a reconsideration request within 40 business days of receiving the FTA's decision.
Conclusion
The FTA's Public Clarification TAXP008 document provides a roadmap to demystifying Tax Assessment Reviews which will be helpful for any taxpayer looking to challenge a decision. To speak with us in relation to a Tax Assessment Review or reconsideration, or any tax matters or issues more generally, please contact one of the Tax team members.
