Introduction
The Federal Tax Authority (FTA) has issued Decision No. 9 of 2025, establishing specific protocols regarding the handling of refund requests connected to residual amounts. This regulation specifically addresses scenarios where a Person is currently subject to a Tax Audit. The Decision was issued on 4 December 2025 and shall take effect from 1 January 2026.
Conditions for Declining Refund of Residual Amounts
The Authority may decline a refund request if the applicant is under Tax Audit and any of the following conditions are met:
- Potential Tax Liability Risks
The Authority may withhold refunds if there is sufficient evidence, derived from information available during the Tax Audit, suggesting that significant tax liabilities may arise in respect of the Person. - Suspicion of Tax Evasion
A refund may be declined if there are sufficient grounds to believe the Person is involved in Tax Evasion. - Supply Chain Evasion Involvement
If there are sufficient grounds to believe the refund request relates to Goods suspected of being part of Tax Evasion within the supply chain, the refund may be declined. - Outstanding Compliance Obligations
A refund can be declined if the Taxable Person has outstanding Tax Returns regarding any type of Tax. - Failure to Provide Information
If the Person fails to provide information requested by the Authority regarding the Tax Audit within the specified timeline, the refund may be withheld. - Non-Cooperation
If the Person fails to cooperate with the Authority in any manner regarding their obligations during the Tax Audit, the residual amounts may be retained.
Conclusion
This empowers the FTA to “hold” refunds as security if they suspect risks of Tax Evasion or operational non-cooperation or if the taxpayer is obstructing the audit process. It emphasizes the importance of keeping all tax filings up to date and responding promptly to FTA information requests.
