The Federal Tax Authority (FTA) has recently issued Public Clarification TAXP008, which introduces a structured approach for taxpayers to challenge tax assessments and administrative penalties. This article outlines key aspects of the new mechanism, the eligibility criteria for filing a review request, and its benefits for businesses in the UAE.
Purpose of the Tax Assessment Review
The tax assessment review mechanism allows taxpayers to challenge tax assessments and penalties issued by the FTA based on errors in the assessment process. This procedure provides an avenue to dispute assessments without needing to file a reconsideration request, which would entail new or additional evidence.
Eligibility to File a Tax Assessment Review Request
Under the new provisions, a taxpayer can submit a request if there is reasonable belief that the tax assessment contains errors in:
- Technical interpretation or application of tax laws.
- Calculation errors.
- Procedures followed by the FTA during the audit.
This clarification gives taxpayers an opportunity to present arguments if they believe mistakes were made, for example, due to miscalculations, reliance on incorrect external confirmations, or failures in communicating audit outcomes.
Key Conditions and Process for Filing
To ensure the review process is effective and timely, the FTA has outlined the following procedural requirements:
- Timeline: Requests must be submitted within 40 business days from the date the taxpayer receives the tax assessment notification.
- Independent Review Team: Reviews will be handled by FTA officials who were not involved in the initial audit, ensuring an unbiased evaluation.
- No New Information: Only existing information presented during the original audit will be considered; taxpayers cannot add new facts or documentation as part of the review.
If the taxpayer misses the 40-day window, an extension may be granted upon request if valid reasons are provided.
Examples of Eligible Cases
Examples where a review may be requested include:
- Issuance of tax assessments for expired audit periods, violating the statute of limitations.
- Assessment based on unverified third-party information or inaccurate transaction values.
- Non-compliance with proper notification protocols for audits or assessments.
- Calculation errors impacting tax liability.
These examples provide clarity on scenarios that justify the need for a review.
Outcome of the Review Process
Once the review request is received, the FTA commits to issuing a decision within 40 business days, unless an extension is notified. Outcomes can include:
- Approval or Rejection: The FTA may either uphold or amend the original assessment.
- Decision Notification: The FTA must notify the taxpayer of the decision within five business days of issuance.
How We Can Help
At XB4, we recognize the importance of understanding and navigating the latest FTA guidelines effectively. Our team of tax advisors is available to help you assess eligibility, prepare requests, and ensure compliance with FTA protocols. For assistance or a consultation on the tax assessment review process, please reach out to our team.
