Navigating tax assessments can be complex, and errors in tax determinations or administrative penalties can have significant implications for taxable persons. Recognizing this, the UAE has introduced an optional Tax Assessment Review mechanism under Federal Decree-Law No. 28 of 2022. This process allows taxpayers to challenge perceived errors in tax assessments and penalties before escalating matters. In this blog, we break down the key points, eligibility, and steps for submitting a review request, ensuring taxpayers understand their rights and the avenues available for fair assessment.
Overview of the Tax Assessment Review Mechanism
The Tax Assessment Review is a process designed to allow taxpayers to dispute errors in tax assessments and administrative penalties issued by the Federal Tax Authority (FTA). This mechanism enables a taxpayer to request an independent evaluation by FTA officials who were not involved in the original audit, ensuring a fair and unbiased review of the assessment. This process is based solely on the existing information and documents provided during the original audit, and it excludes the submission of new evidence.
Grounds for Tax Assessment Review
To qualify for a Tax Assessment Review, taxpayers must demonstrate specific, legitimate grounds for their request. Some common reasons that may warrant a review include:
Technical Errors
If a taxpayer believes there was an incorrect application of tax laws, treaties, or procedures, they may apply for a review.
Calculation Mistakes
Any inaccuracies in tax calculations that resulted in an incorrect tax assessment or penalty amount are eligible grounds.
Procedural Errors
Instances where the FTA did not follow correct audit procedures or relied on unverified information could qualify for a review.
Statute of Limitations Violation
Issuance of a tax audit notification for a period that has exceeded the statute of limitations, such as conducting an audit more than five years after the end of the relevant tax period.
Lack of Notification
If the FTA conducted an audit or issued a tax assessment without notifying the taxpayer of the audit in advance.
Unsupported Reliance on External Data
Situations where the FTA relied on undocumented or uncertified data from external parties in determining taxable supplies, leading to the tax assessment.
Failure to Request Additional Evidence
Belief that the FTA did not ask for critical data or evidence that could have influenced the audit’s accuracy.
Errors in Tax Treatment of Transactions
Issues arising from incomplete audit procedures or disregarded documents during the audit, which affected the tax treatment of specific transactions.
Assessment for Non-Audited Periods
Issuance of a tax assessment covering periods that were not included in the tax audit notification.
How to Submit a Tax Assessment Review Request
If taxpayers meet the eligibility requirements, taxpayer can submit a Tax Assessment Review request to the FTA. Here’s a step-by-step guide to ensure a smooth submission:
Submission Deadline
Taxpayers must submit their review request within 40 business days of receiving the tax assessment and related administrative penalty notification from the FTA.
Application Requirements
The request must detail the reasons for the review and provide supporting documentation that was previously available during the audit.
Submission Email
Requests can be sent via email to AssessmentReview@tax.gov.ae.
Extension of Deadline
If circumstances prevent a taxpayer from meeting the 40-day deadline, they may request an extension from the FTA. This is possible only if valid reasons, such as unforeseen delays or extenuating circumstances, are provided.
The FTA’s Decision-Making Process and Response Timeline
Once a taxpayer submits a review request, the FTA will evaluate the request within a specified timeframe and consider all evidence provided during the original audit. Here’s what to expect:
Response Timeline
The FTA aims to review the request and issue a decision within 40 business days from the date of receiving the application. If additional time is required, the FTA will notify the taxpayer of the extended period.
Decision Notification
The FTA will inform the applicant of the decision within 5 business days after reaching a conclusion.
Possible Outcomes
Request Rejection
The FTA may reject the request if procedural requirements were not met, such as missed deadlines or the inclusion of new information.
Adjustment of Tax Assessment
If the FTA identifies any errors, it may adjust the tax assessment or associated penalties to reflect the correct amount.
Confirmation of Original Assessment
If the FTA finds no errors, the original tax assessment and penalties will remain unchanged.
Next Steps if the Review Outcome is Unsatisfactory
If taxpayers are dissatisfied with the outcome of your Tax Assessment Review or if the FTA does not respond within the prescribed timeframe, taxpayer have the option to file a reconsideration request. This reconsideration allows taxpayers to submit additional evidence and information that may not have been available during the original audit. To apply for reconsideration, taxpayers must:
Submit the Request
The reconsideration request should be filed within 40 business days of receiving the Tax Assessment Review decision or within the extended period, if applicable.
Include New Evidence
Unlike the review, the reconsideration process allows for the submission of new supporting documents or evidence.
How RVG can help?
At RVG Chartered Accountants, our team of experienced tax professionals is well-equipped to guide you through each step of the Tax Assessment Review and reconsideration process. Located in the UAE, we specialize in providing tailored support to help clients accurately present their cases, manage documentation requirements, and address any technical or procedural issues that may arise. With our expertise in UAE tax regulations, RVG Chartered Accountants is committed to helping clients achieve fair tax outcomes and maintain compliance.
