The Federal Tax Authority (FTA) operates under the Tax Procedures Law, Federal Decree-Law No. 28 of 2021, as amended by Federal Decree-Law No. 17 of 2025 (effective 1 January 2026), which gives it the power to assess payable tax, conduct tax audits, determine cases of evasion, and issue administrative penalties. When a business disagrees with an FTA decision, whether it concerns a VAT assessment, a Corporate Tax penalty, or a rejected refund, the law sets out a fixed sequence for challenging it: an internal reconsideration request first, an objection to an independent committee second, and a court appeal only as a last resort for larger disputes.
This article sets out that three-stage process as it currently stands, the deadlines and payment rules that apply at each stage, and where UAE businesses most commonly get the process wrong.
Common Reasons the FTA Issues Penalties You Can Dispute
Most tax disputes start with an administrative penalty. The FTA can issue one where it finds that a person or business has:
- Failed to register for VAT or Corporate Tax as required by law
- Submitted an incorrect tax return
- Failed to submit a tax return by the deadline
- Paid part of the tax due in a way that suggests an attempt to understate the actual liability
- Intentionally failed to settle payable tax or a penalty
- Made an intentional understatement of a tax liability
- Submitted falsified information or incorrect documents to the FTA
- Withheld documents instead of submitting them to the FTA on request
- Concealed or destroyed documents or records in the FTA’s possession
- Obstructed FTA personnel from carrying out an audit or inspection
Not every one of these carries the same weight. A late VAT return is a routine administrative penalty. Falsified documents or deliberate obstruction can be treated as tax evasion, which under Federal Decree-Law No. 28 of 2021 extends the FTA’s audit window from the standard five years to fifteen years for the periods involved. The dispute route is the same in both cases, but the evidence a taxpayer needs to put together is not.
The 5-Year FTA Audit Window and Voluntary Disclosure Rules
Before looking at how to dispute a penalty, it is worth understanding how far back the FTA can go to raise one. Under Federal Decree-Law No. 28 of 2021 as amended by Federal Decree-Law No. 17 of 2025, the FTA generally has five years from the end of the relevant tax period to conduct a tax audit and issue an assessment. That window extends to fifteen years where the FTA finds tax evasion, or where a person who was required to register for VAT or Corporate Tax never did so.
A separate route exists for businesses that catch their own error before the FTA does. Filing a Voluntary Disclosure through EmaraTax to correct an underpaid tax amount or an error in a submitted return, within the same five-year window, generally attracts a lower penalty outcome than waiting for the FTA to identify the same error during an audit. Once the FTA has opened an audit covering a given tax period, a Voluntary Disclosure for that period no longer carries the same reduced-penalty treatment. This distinction matters for the dispute process described below: a business correcting its own mistake should generally use Voluntary Disclosure rather than wait for a penalty and then dispute it, since a dispute only ever argues that an FTA decision was wrong, not that the underlying liability should be reduced because the taxpayer came forward first.
Also check: VAT Appeals and Dispute Resolution in UAE
Need Expert Advice?
Contact the team at Farahat & Co. for professional support and expert insights for businesses operating in the UAE.
Payment Rules Before You Can Dispute a Tax Penalty
A common misunderstanding is that all FTA penalties must be paid in full before a taxpayer can dispute them at any stage. That is not accurate. The payment requirement applies at specific points in the process, not at the outset:
- No prior payment is required to submit the initial Reconsideration Request to the FTA.
- Full payment of the disputed tax and penalties is required before an objection can be filed with the Tax Disputes Resolution Committee (TDRC).
- To proceed to a court appeal, the taxpayer must have paid the full tax amount and at least 50% of the administrative penalties, or provided an equivalent bank guarantee, in addition to whatever was already paid before the TDRC stage.
Payment can be made through EmaraTax using e-Dirham, bank transfer, or a supported card option. Keeping the payment confirmation is essential, since proof of payment is a required attachment at both the TDRC objection stage and the court appeal stage.
The Three-Stage Process to Resolve a Tax Dispute in the UAE
A tax dispute in the UAE moves through up to three stages, and each stage has its own deadline, its own form, and its own decision-maker.
Step 1: Reconsideration Request to the FTA
The first stage is an internal review by the FTA itself, filed through EmaraTax. The taxpayer must submit the Reconsideration Request within 40 business days of being notified of the FTA decision being challenged, setting out the specific legal and factual grounds for disagreement, referencing the relevant provisions of the Tax Procedures Law or the tax law in question. A request that simply states disagreement without a legislative basis is routinely rejected.
The FTA has up to 45 business days from receiving a complete request to respond, and must notify its decision within 5 business days of issuing it. If the FTA does not respond within its deadline, or the taxpayer disagrees with the outcome, the dispute moves to the second stage.
Step 2: Objection to the Tax Disputes Resolution Committee (TDRC)
The Tax Disputes Resolution Committee is an independent body, chaired by a judge, that sits apart from the FTA and the Ministry of Finance. A taxpayer who disagrees with the reconsideration decision has 40 business days from being notified of it to file an objection with the TDRC, using the prescribed objection form.
Before filing, the full disputed tax amount and any related administrative penalties must already be paid. The objection must be accompanied by the original FTA decision, the reconsideration application and its outcome, and proof of payment. The TDRC is required to issue its decision within 20 business days of receiving a complete objection, extendable by a further 20 business days where the committee needs more time to review the case.
For disputes where the combined tax and penalties do not exceed AED 100,000, the TDRC’s decision is final. There is no further right of appeal for smaller amounts, which makes getting the reconsideration and TDRC submissions right the first time considerably more important for smaller businesses than the existence of a court option might suggest.
Step 3: Judicial Appeal to the Competent Court
Judicial appeal is only available where the disputed tax and penalties exceed AED 100,000. The appeal must be filed within 40 business days of the TDRC decision, and before filing, the taxpayer must have paid the full tax amount and at least 50% of the administrative penalties, or provided a bank guarantee for the outstanding balance.
Which court hears the case depends on where the taxable person is established. Businesses established in emirates that fall under the federal judicial system file with the competent Federal Court; businesses established in Dubai or Ras Al Khaimah, which maintain their own local judicial systems outside the federal courts, file with the relevant local court instead. A decision at this stage can be appealed further through the ordinary civil appeal and cassation process, which extends the timeline considerably and is why most disputes are resolved at the reconsideration or TDRC stage rather than reaching court.
Also check: Tax Dispute Resolution Services in UAE
Worked Example: A Reconsideration Request Timeline
The deadlines above are easier to apply with a concrete timeline. Suppose the FTA notifies a company on 5 January that it has assessed a VAT penalty of AED 45,000 for a late return, and the company disagrees because it can show the return was in fact filed on time.
| Date | Event |
|---|---|
| 5 January | FTA issues its penalty decision. The 40 business day clock for filing a Reconsideration Request starts. |
| By around 2 March | Deadline to submit the Reconsideration Request through EmaraTax, with the filing confirmation and legislative grounds attached (40 business days from 5 January, excluding weekends and public holidays). |
| By around 6 May | FTA’s outside deadline to respond (45 business days from receiving the complete request). |
| If rejected | The company has 40 business days from the rejection notice to pay the AED 45,000 in full and file an objection with the TDRC. |
| Within 20 to 40 business days of a complete TDRC objection | TDRC issues its decision (20 business days, extendable once by a further 20). |
Because AED 45,000 falls under the AED 100,000 court threshold, the TDRC decision in this example would be final. If the disputed amount had instead been AED 250,000, the company would have had a further 40 business days after the TDRC decision to pay the balance required and file a court appeal.
Common Mistakes That Weaken a Tax Dispute
| Mistake | Why it happens | Consequence |
|---|---|---|
| Missing the 40 business day filing window | Businesses count calendar days instead of business days, or wait for internal sign-off before starting the filing | The right to a Reconsideration Request or TDRC objection lapses, and the original FTA decision stands |
| Filing an objection without paying first | Assuming the same payment-first rule applies to the initial Reconsideration Request as it does to the TDRC stage | The TDRC objection is rejected as incomplete, and the 40 business day window may run out while the taxpayer scrambles to pay |
| Disputing the penalty amount without citing the law | Treating the process as an informal complaint rather than a legal submission | The FTA or TDRC has no legal basis to overturn a properly calculated penalty, even where the taxpayer has a reasonable grievance |
| Not keeping records long enough to support the dispute | Assuming standard retention periods (7 years for Corporate Tax, 5 years for VAT) are the only figures that matter | Under Cabinet Decision No. 17 of 2026, records tied to a pending refund claim must be kept for 2 years beyond the standard period; discarding them early leaves a dispute without supporting evidence |
| Waiting for a penalty to dispute an error the business already knew about | Not realizing Voluntary Disclosure carries reduced-penalty treatment if filed before an FTA audit begins | A self-identified error becomes a full administrative penalty once the FTA finds it first, with no dispute route that can undo the missed opportunity |
Tax Disputes Resolution Committee vs Federal Court: Choosing the Right Route
For most businesses, the TDRC is not really a choice, it is a mandatory step before court becomes available at all. But understanding how the two routes differ helps explain why so few disputes reach a courtroom.
| Factor | Tax Disputes Resolution Committee (TDRC) | Court Appeal |
|---|---|---|
| Availability | Available for any disputed amount, following a rejected or unanswered Reconsideration Request | Only available where disputed tax and penalties exceed AED 100,000, and only after a TDRC decision |
| Payment required first | Full disputed tax and penalties | Full tax plus at least 50% of penalties, or a bank guarantee, on top of what was already paid at the TDRC stage |
| Decision timeframe | 20 business days, extendable by a further 20 | Follows ordinary civil court timelines, typically several months to over a year including appeal stages |
| Finality | Final and binding where the disputed amount is AED 100,000 or below | Subject to further appeal and cassation, extending the dispute further |
| Composition | Chaired by a judge, sits independently of the FTA and Ministry of Finance | Ordinary federal or local court, depending on the taxpayer’s jurisdiction |
In practice, the strongest position a business can be in is not needing the court stage at all. A well-documented Reconsideration Request that cites the correct legal provisions resolves a meaningful share of disputes before they ever reach the TDRC.
Also check: Tax Agent in Dubai, UAE
Frequently Asked Questions
What is the deadline to file a Reconsideration Request with the FTA?
Do I have to pay a tax penalty before I can dispute it?
What is the Tax Disputes Resolution Committee (TDRC)?
Can I appeal a TDRC decision in court?
How far back can the FTA audit my business and issue a penalty?
How can Farahat & Co. help with a tax dispute in the UAE?
Need Expert Advice?
Contact the team at Farahat & Co. for professional support and expert insights for businesses operating in the UAE.
How Farahat & Co. Can Help
Farahat & Co. reviews FTA assessments and penalty decisions, prepares Reconsideration Requests and TDRC objections with the required legislative grounds and supporting documentation, and advises on Voluntary Disclosure where a business identifies its own error before the FTA does.
Contact Farahat & Co. today to discuss your tax dispute resolution requirements.
