UAE Private Clarification Requests: New Refund Policy

To enhance clarity and performance for taxpayers, the UAE Federal Tax Authority or FTA issued Decision No. 5/2024 dated on July 19, 2024 on the refund of fees for private clarification requests. This new policy came into effect commencing from August 1, 2024.

To Whom Can a Clarification Request Be Submitted?

In any case, it is the party that needs clarification on a particular issue that should formally write the FTA on the matter. However, there are specific circumstances where others can submit on behalf of the applicant: However, there are specific circumstances where others can submit on behalf of the applicant:

• Appointed Tax Agent: If you have appointed a Tax Agent which registers for the concerned type of taxation type like Corporate Tax, VAT, or Excise Tax the application can be submitted through the Tax Agent. The tax agent is to be mandatory registered for the tax related to the application.
• Appointed Legal Representative: A duly appointed legal representative can also apply for this on behalf of the patient.
• Representative Member of a Tax Group: In case you are in a Tax Group, then the request should be from the group representative. This is to point out that, tax consultants who have not registered with FTA as Tax Agents cannot apply for clarifications on behalf of other people.
• Estimated Response Time from the FTA: If you provide a valid complete application, the FTA usually takes not more than fifty business days to respond. If there are missing documents or further documents are needed after submitting the application the FTA will ask for it. After the provision of the additional information, the FTA may take another 50 business days to respond;

Clarifications and Reconsideration

The legal opinions that FTA might provide do not constitute formal decisions of the office, and therefore, cannot be considered for review. This means that once a clarification is provided, it will not be possible to reverse the decision of the FTA concerning the issue in consideration. 

Also read: Federal Tax Authority to Refund Fees for Private Clarification Requests

Others Clarifications

Terminologies used by the FTA are legal explanatory notes which are meant for the individual use of the applicant and therefore cannot be utilized by other people. This helps in making sure that the clarification that has been made only caters for the certain condition that was sought.

Under What Circumstances FTA Reject a Request for Clarification?

The clarification request may be rejected by the FTA for several reason as mentioned below: –

• Legal Uncertainty: In case the FTA does not think that there are legal issues over the queried area, your request can be declined.
• Requests for Exceptions or Penalty Waivers: In other words the clarification service is not designed to ask for any exemptions to the tax legislation or request for non-imposition or reduction of penalties.
• Seeking Tax Advice: The FTA will not give you an answer if your question is actually a ‘what do I do about this?’ kind of query as opposed to an ‘I have interpreted it thus, Is this right?’ kind of question.
• Incorrect Tax Type: It will be rejected if your request does not pertain to one or multiple correct tax types.
• Ongoing Tax Audit: Your request cannot be granted if the matter for which clarification is being sought relates to a tax audit which has been conducted by the FTA.

What Happens After Submission?

After having provided all the details to the FTA, your application shall be reviewed by the FTA. After their review, they will respond by providing clarification on the previously flagged issues, seeking for more information, or reject your application.

FTA will communicate with you the decision made through an email. If more information is required, you will be asked to fill the requested information and forward the application in order to proceed the process.

Withdrawing an Application

You can withdraw your application at any time before the FTA sends a clarification response your way. This option is useful if your circumstances do change or if you find that you do not require the clarification anymore.

Also read: Excise Tax Registration Services in UAE

Return of the Fees for Cancellation of Withdrawal of the Requests

A fee is charged any time a clarification request is made and such fees are not refundable. Nonetheless, the FTA may, on its own volition, consider as a policy to refund the fees if clarification has not been offered.

Implication of Submissions of Clarifications for Different Tax Types

This service enables you to file clarification requests in relation to VAT, Excise Tax and Corporate Tax requests. These requests can be filed for individual tax types, or jointly for multiple tax types if your question refers to more than one tax type. However, it has to be pointed out that at the moment, only the Corporate Tax registration queries can be asked for the clarification.

Conclusion

The clarification process forms an essential activity of the FTA’s tax administration where applicants are given an official explanation of how tax laws work within certain circumstances. The information concerning the eligibility, process, and criteria that lead to a clarification submission will enable applicants to present correct clarification requests hence enhancing an improved response from the FTA.

Thus, it is vital to prepare adequately and properly grasp the fee structure in case a clarification is requested while dealing with any business.