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The UAE Cabinet has issued Federal Decree-Law No. 28 of 2021 (16 September 2021), amending Federal Decree-Law on Tax Procedures No. 7 of 2017 (11 June 2017) (The Federal Decree-Law on Tax Procedures).

The amendments are effective from 1 November 2021.

All taxpayers should take note of the amendment of The Federal Decree-Law on Tax Procedures with effect from 1 November 2021 with below notable changes:

1. The time limits for filing reconsideration applications, objections before the Federal Tax Authorities (FTA), Tax Dispute Resolution Committee (TDRC), and appeals before Competent Courts have been increased from 20 to 40 business days.
2. The FTA should review the reconsideration request and issue its decision within 40 (previously 20) business days from the date of receiving the applications and should inform the applicant of its decision within five business days from the date of issuance of the decision. In its decision, the FTA will have to explicitly state reasons for making such a decision.
3. Objection before TDRC is not admissible if it is not filed within 40 business days from the date of being notified of a reconsideration decision by the FTA.
4. When filing an objection before TDRC, only the tax amount (as against tax and penalties previously) should be deposited for admissibility of the case.
5. The TDRC’s final decisions regarding disputes exceeding AED 100,000 should be deemed as executory instruments if they were not appealed before the Competent Courts within 40 (previously 20) business days from the date of notification of the outcome of the objection.
6. An alternate mechanism for filing objections and appeals to be prescribed for federal and local government entities in tax disputes for which the Cabinet shall – according to a suggestion by the Minister – issue a respective decision.
7. As a pre-condition for filing an appeal before the Competent Courts, a minimum of 50% of penalties (or as may be decided by the Competent Courts), to be paid either by way of cash transfer or bank guarantee (as opposed to full amount).
8. Cases for waiver, refund and payment in installments of administrative penalties to be reviewed and approved by a special committee (previously by the FTA). The separate decision by the Chairman of the Board of the FTA shall set out the formation of the committee, its bylaws, and the manner of holding meetings for such cases.
9. The Cabinet decision is now expected for more details on controls and procedures to be used during committee meetings, regarding approving the payment by installments of the penalty amount or totally or partially waiving or refunding it. The controls specified in the Executive Regulation of the Federal Decree-Law on Tax Procedures are not anymore referenced as a result of the amendments.

An increase in the time limits for filing tax applications/objections and softening the requirement to pre-deposit only tax amounts for filing objections before TDRC and 50% of penalties at the time of appeal before the Competent Courts should significantly ease the tax disputes procedures for the UAE taxpayers.

The FTA has confirmed that the new amendments advance a series of developments and enhancement plans for tax legislation and procedures. These are designed to facilitate objection to the authority’s decisions by extending objection periods for individuals, improve the efficiency of the tax system, further registrants’ confidence in it, and support taxpayers in fulfilling their tax obligations with easy and transparent procedures.

KPMG has a team of experienced tax specialists that can help you assess your current tax position, advise on the appropriate tax treatment, prepare clarification requests or represent you in front of the FTA as registered tax agents.

We are happy to discuss your specific circumstances with you and determine the way forward should you have any questions or concerns in this regard. Please get in touch with your usual KPMG contact or any of the tax professionals below.