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VAT penalties in UAE

How to appeal for VAT penalties in UAE

If any taxpayer fails to disagree with the decision of the court they can forward the concern to the court for settlement of the tax dispute. It is very important for the taxable person to understand the procedures to apply for a dispute in case if the need arises. Before going into the procedures of appealing for dispute let’s have a look into the requirements and actions that invite penalties.

Read More: VAT Penalties Explained

Requirements for the Taxpayers for understanding Filing a Tax Dispute

  • Taxpayers need to understand the tax regulation and process of filing a dispute for contesting penalties.
  • Submitting an application for reconsideration of the claim for penalties then goes for a dispute
  • Appealing to Federal court if the amount exceeds AED 100,000 and if the case is not settled by the dispute resolution procedures to federal court.

Some of the actions that may invite Penalties

  • Failure to submit a VAT return in UAE
  • Incorrect submission tax return
  • Non-maintenance of records related to tax in UAE
  • Intentionally failing to pay penalties
  • Deliberately providing incorrect information
  • Intentionally involving in tax evasion and tax evasion policy.

Stage 1: Filing an application for reconsideration to the FTA

Any person may submit a request to the Authority to reconsider any of its decisions issued in connection to him, provided that the reasons are included, within 20 business days from him being notified.

The Authority shall review a request for reconsideration if it has fulfilled the requirements and issue decision within 20 business days upon receipt of the application. The authority shall inform the applicant of its decision within five business days as of the issuance thereof.

Stage 2: Submitting the objection to Tax Dispute Resolution committee

When the decision of the FTA is not relevant or if the taxpayers are not satisfied with the decision taken by the FTA then they can forward the issue to the Tax Dispute Resolution Committee.

A petition may be filed with TDRC by the taxpayer with the jurisdiction to look into the matter for considering the tax dispute in UAE. Tax dispute resolution may decide the matter and may also extend the issue if the matter is of serious concern.

The time limit to file with TDRC is within 20 business days after receiving the results from FTA regarding the request of reconsideration.

Stage 3 Appealing to the Federal Court of Appeal

When the tax dispute for the vat late payment penalty UAE is less than AED 100,000 then the decision taken by the Tax Dispute Resolution Committee will be binding and all the parties have to abide by the decision.

An amount of AED 100,000 or greater will be final they shall be appealed to Federal Court. The dispute should be filed within 20 days from the notification of the decision of TDRC.

Read more: VAT Returns Fines and VAT Penalties in the UAE For Noncompliance

Other disputes regarding VAT

There may be disputes that may arise because of the incorrect tax treatment or any other tax obligation, were the TDRC may not be involved.

In such cases, this kind of issues will be filed with the civil court of the first instance with the relevant emirate. The cases will be dealt with by the court appointed experts and tax experts in UAE. The assessment will also include specialist tax support with the help of litigation lawyers.

You may want to know: Administrative penalties under VAT in UAE

Some of the reliefs provided by FTA

  • Federal Tax Authority can waive and reduce the penalties when they have a justification to believe that the imposed penalties are unjust or unfair
  • Imposing a penalty on the taxpayer when they have an excuse acceptable to the Authority.
  • The taxpayer provides evidence to the authority that justifies the violation which led to the imposition of Penalties.
  • The reduction and waiving of the penalty may be notified by the Authority as specified by the Authority
  • When the Person proves that they have corrected the violation

VAT Consultant in UAE

Taxpayers in UAE might have faced a lot of irregularities regarding the technical decision taken by FTA in UAE. The tax dispute and litigation in UAE can be a quick process if they are handled by VAT experts in UAE. We have a team of experts who dealt with VAT litigation and provides a possible solution regarding VAT.

For more information book your consultation now!

What is the coverage of VAT in products and services?

VAT will be charged for the limited number of goods and services and a limited number of reliefs will be granted.

What are the rates for VAT in UAE?

Standard VAT rate charged for goods and services in UAE is 5%. There are certain supplies that are exempt and zero rated.

Find out: VAT Registration Threshold Calculation in UAE

What are the sectors exempt from VAT?

Below mentioned sectors are exempt from VAT

  • Certain financial services
  • Sale of bare land
  • Local transportation services
  • Leasing or selling of residential property
Find out - VAT on Residential Real Estate in the UAE