The Council of Ministers of the United Arab Emirates issued Council Resolution No. 105 of 2021 on the procedures and controls for the installment of administrative fines issued by the federal tax authority and the procedures and rules for the exemption of such penalties and their refund. The resolution set out those controls and procedures and defined the terms of reference of the Committee established in this regard.
This article reviews the rules and procedures of the Committee established by the Federal Tax Authority in examining applications for installment and exemption from administrative fines on tax and set forth the rules and procedures for the restitution of such penalties.
Procedures for applying for exemption and installment
Article (5) of Cabinet Resolution No. 105 of 2021 regarding the controls and procedures for the installment of administrative fines, the exemption from them, and their reimbursement. The procedures followed in submitting installment requests and exemption from administrative fines. Following Clause (1) of Article 5 above, these requests are submitted to the Federal Tax Authority through the forms prepared for this purpose. The request must include several data and documents, including For example, but not limited to, the name of the person submitting the request and information related to it, including the correspondence and e-mail address, the reasons for submitting the request, the tax registration number if any, the number of administrative fines and violations related to the request, and the date of imposing the administrative fines in question.
Examination of requests for exemption and installment
Following Article VI of the Council of Ministers Resolution No. 105 of 2021 referred to earlier, the Federal Tax Authority shall study the applications submitted to it by the person regarding installment or exemption from administrative fines and verify that those applications meet the regulations and procedures stipulated in this resolution.
After conducting the necessary study and verification, the director-general of the Federal Tax Authority shall submit the received and completed applications to the competent Committee in this regard (a committee established following Article 46 of the Tax Procedure Law No. 7 of 2017 and its amendments. It shall be competent to issue decisions approving the installment, exemption, and refund of administrative fines) within a period not exceeding 40 working days from the date of receipt of the application.
Consideration of applications by the Committee for installment, exemption, and refund of administrative fines
According to Article 7 of the Council of Ministers Resolution No. 105 of 2021 on the procedures and controls for the installment, exemption, and restitution of administrative fines; the Committee for the installment, exemption and refund of administrative penalties is the administrative body responsible for determining the period through which requests for exemption must be submitted. Additionally, the Committee establishes the system of administrative fines installment and its plans, following its schedules and the dates and restrictions for advance payment.
Additionally, the Committee examines and approves applications for payment of administrative fines and requests for exemption. It is proved that such applications were filed following all processes and restrictions indicated in Decision No. 105. To that end, the Committee may request any additional documents, statements, or clarifications from the applicant in coordination with the Federal Tax Authority. The Committee also determines the amount of the exemption from fines at its discretion.
Following the decision mentioned above, the Committee for installment, exemption, and restitution of administrative fines must decide on the applications submitted within 60 working days of the submission of the subject to it. Otherwise, failing to respond is regarded as a rejection of the request, and the Committee’s decision to decide on the application is final. The commission may request from the applicant any assurance it deems appropriate to the commission to implement the installment plan.
Implementation of Committee decisions
Following Cabinet Decision No. 105 of 2021 on the rules and procedures for installment, refund, and exemption of administrative fines, the federal tax authority must notify the applicant of the installment or exemption of administrative fines by e-mail or the address indicated in his application, of the decision of the administrative fines installment, exemption and refund Committee on his application, within ten working days from the date of issuance of the Committee’s decision.
If the payment of administrative fines is approved, the Federal Tax Authority shall inform the applicant of the plan’s details established by the commission. The installment receivable shall be obliged to pay the installments following the installment decision determined by the competent Committee in this regard.
According to the fourth paragraph of Article 8 of the Council mentioned above of Ministers Resolution No. 105, the Federal Tax Authority shall monitor the installation of the installment Committee’s decisions and be exempt from administrative fines. To ensure that the person against whom the decision was issued must pay the due installments on the scheduled dates. Provided, however, that the authority must submit reports on instances of non-payment to the Committee for resolution.
Following Article (9) of the Council of Ministers Resolution No. 105 of 2021 mentioned above, the competent Committee may cancel the installment decision in case of default. It may also determine a new payment plan if the person submits acceptable reasons for default. The Committee may direct the federal tax authority to take legal measures to collect administrative fines.
What are the controls and procedures for the refund of administrative fines?
Article (11) of the Council of Ministers Resolution No. 105 of 2021 referred to above includes the controls and procedures followed by the competent Committee for The Restitution of administrative fines. The article stipulates that the Committee shall determine the rules and cases for the refund of fines collected during the five years preceding the date of consideration of their refund to achieve tax justice and equality between the legal positions of the persons subject to the tax. The Federal Tax Authority shall study the effects on the refund of administrative fines and submit recommendations to the competent Committee (the Committee for installment, refund, and exemption of administrative fines).
Following Article 12 of the resolution mentioned above, the director-general of the Federal Tax Authority shall submit to the Committee the cases in which administrative fines are proposed for restitution. For that purpose, the Committee shall determine the administrative fines for which it approves their repayment, the reasons for The Restitution of administrative fines and the total value thereof for each category of registered persons covered by restitution.
According to Article 13 of Cabinet of Ministers Resolution No. 105 of 2012 mentioned above, administrative fines shall be reimbursed according to their addition to the beneficiary’s tax account balance within 90 days of the decision approving the reimbursement of administrative fines. Administrative fines shall also be paid following the cash reimbursement if the applicant’s registration is canceled following the procedures of the Federal Tax Authority.
In all cases, if the Committee decides to reject the request for exemption from administrative fines or their installment, the Federal Tax Authority shall take the necessary legal measures to collect those administrative fines.
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