The FTA issued the Clarification No.TAXP008 in line with the Decree-Law No. 28 of the year 2022 that the taxpayers can challenge the assessments without the requirement of reconsideration application. This article demonstrates why particularly timely reviews are important for businesses and how compliance guarantees transparency.To substantiate the aforementioned objection rate, examples are given, and the reader is instructed in detail as to what is often wrong and why UAE tax assessments should be reviewed.

Errors and Grounds for Tax Assessment Review

The following common grounds and errors are considered for tax assessment review as per Clarification No.TAXP008:

●      Tax Audit Notices Issuance After expiry of Limitations:- Tax periods are governed by time frames, and they are not terms that flaunt to be unreasonable for an audit to be duly carried out, therefore, FTA cannot perform audits for periods older than five years from the end of the relevant tax period as statute limitations have been set forth by law. All relevant notices or assessments that were made after this period will all appear invalid for instance, a company submitted tax returns in 2017, the tax audit notice can be issued within the time frame given in the law therefore any audit notice after the expiry of 5 years limitation will be without lawful authority.

●      Advance Notice Before an Audit :- FTA should give advance notice to taxpayers when planning a tax audit. In this way taxpayers are assured that they will have all relevant documents to be submitted and be present during the audit for instance advance notice prior to an audit though issued but not served properly and the  businessman was unaware of the advance notification concerning the FTA tax audit only to later learn of the tax assessment, the company’s assessment was eliminated successfully after it was established the process had been unjust.

●       Unsubstantiated information from other parties:- The basis for tax assessments must not only be credible information but also such information ought to be proved and verified. Taxpayers’ concerns about challenges are valid if the assessment is made from unsubstantiated information from other parties.

●      Inadequate Request for Necessary Documents by the FTA:- FTA should seek relevant information and documents from the parties wherever they conduct an audit. This is important because, absent sound evidence and documents, the accuracy of the report on the audit findings may be put into question.In case a taxpayer held records demonstrating the exemption from VAT for particular transactions. Still, the FTA issued an assessment without asking for these records to be produced by the taxpayer. The taxpayer has the right to make a review request where he/she maintains that had the documents not been ignored, the outcome of the audit would have been different.

●       Mistakes Committed in the Valuation of Taxable Supply:- When the taxable supplies are incorrectly valued, it can lead to over or under assessment of tax liabilities for the taxpayer who may suffer losses or fail to achieve the desired financial goals.In case a taxpayer assessed on the assumption that his non-taxable promotional items were included in the taxable sales. Through clear records and appropriate invoices, the taxpayer might be entitled to amend the assessment by review request.

●       Overstatement of Excess Inventories for Excise Tax Purposes:- Excise taxable businesses have such problems as overstatement of excess inventory in the incidences of calculation errors. Such mistakes can lead to heavy losses under tax liabilities.In case a taxpayer files an accurate excise tax for inventory purposes, but the FTA relies on historical stock figures that are no longer valid. The registered person may file a request for review drawing attention to the errors by requesting that there be a re-evaluation.

●       Wrong Estimation Basis for Tax Assessments:- Mistakes that stem from the defective estimation approaches when making assessments may, and usually does, lead to wrong assessments of tax liabilities. Taxpayers have a right to defy such estimations and present actual statistics.

●      Flaws in the Tax Assessment Process

-        8.1. Distortions in the Assessment Process and Shortcomings in the Judgement of a Taxpayer's Ability to Pay:-A restaurant chain was charged with an average tax assessment based on income that was in direct relationship to industry averages. Only seasonal demand was lower. The chain contested the assessment, successfully, by filing financial statements in detail.

-        8.2. Errors in Tax Calculations:- Errors in the adoption of the tax rates, formulas or computations have the same effects of overburdening taxpayers by the tax they are not liable to pay.Where a VAT registered manufacturer observed that the FTA used a VAT factor of 10% when it should have been 5%. The firm requested a review of the case after making a number of calculations and providing supporting evidence to show the contradiction.

●      Incorrect Tax Treatment of Various Transactions:- It doesn't matter how these misclassifications arose or how incomplete audit procedures were performed; they do not change the fact that the outgrowth effect is an improper tax treatment of various transactions.Instance of a company Adam and Sons (International) provided the authorities proof that certain international transactions should have been exempted from VAT because they were indeed VAT exempt. The FTA, however, erroneously added those transactions to the taxable supplies leading to great overstatement. CFC has also made a request for a review which was caused by imbalance in the taxation.

●      Assessments Resulting from Tax Periods Not Notified:- The FTA can only assess tax liabilities for periods that are specifically notified to the recipient in the FTA notification form. The practice of taxing periods not covered by the notification is contrary to the principles of tax fairness. In case a business provider protests during the assessment of periods that are not within the time period of the audit notification. The action was justified since there was a breach of procedures on the side of the FTA.

●       Audit Findings Not Sent to the Registered Address of the Taxpayer:- Taxpayers can receive the audit result on the registered address in their records. In the case where the FTA does not provide these results, it lacks the ability to hear the taxpayer or obtain an appeal. For instance, a company came to know that the audit findings had been delivered to outdated premises and any response to it would be delayed. The company is said to have lodged a review based on procedural flaws.

Compute Tax Return under Corporate Tax UAE

The Errors and the Practical Examples

A. Claiming Input Tax Credits on Acquisitions That Were Not Valid

• A construction company was claiming VAT input credits with regard to staff accommodation, but it was the opinion of the FTA that these could not be entitled credits because they were personal expenses. The company was successful in establishing the legitimacy of these credits by submitting HR policies together with expense reports.

B. Application of VAT Exceptions in an Illegal Manner

• A travel agency dealing in international packages performed taxation on service provision that was zero rated by VAT law. After the submission of a review request, the FTA admitted the existence of the exemption and amended the assessment.

C. Non-Inclusion of Documents in the Audits

• The dealership presents documents for refunds obtained on returned cars therefore the FTA should consider these documents while conducting the audit. The dealership requested a review, which was actuated in favor of the taxpayers.

Ways of Making a Review Request

Timeliness and systemic procedures are key when a taxpayer is making a review request:

Establish Grounds:	This requires a clear articulation of the error that occurred or the procedure that was violated.
Legal Evidence:	Essential records and documents
Call for the Review:	The review application should be sent to the FTA within the specified time limit.
Engage professionals	Persisting and engaging professional advisers in levels of tax and law is encouraged.

Key Takeaways

Tax assessment mistakes can cause business and individual entities to incur excess costs. Knowledge of the common grounds for review and patience in filing within time limits helps the taxpayer realize their rights while being compliant. These are issues which, when accompanied by adequate documentation and sound professional advice, are low risks and only ready to sustain a reasonable tax position in UAE law.

FAQs on Tax Assessments in the UAE

1. What are some common errors in a UAE tax assessment review?

• Tax audit notice issuance after limitation has expired.
• Lack of advance notification for tax investigations.
• Fee assessments without checking or verifying documents.
• Failure to summon essential documents during audits.
• Incorrect valuation of taxable articles and excise duty on excess inventories.
• Incorrect formulas/tax rates.
• Misclassifying consumption tax revenue transactions as sales.

2. What should I do to avoid errors in my UAE tax return?

• Organized all records i.e.transactions with supporting documentation.
• Follow FTA-given deadlines, and procedures by maintaining the required documents
• Double-check tax formulas /rates for calculations.
• Seek tax advice while filing returns before submission.
• Stay updated on tax laws and procedures

3. For what valid reasons can a taxpayer in the UAE demand a review of the assessment carried out by the competent authority?

• FTA incorrect assessment processes
• Valuation errors or miscalculations
• Non-issuance of notice before audits
• Notice after time limits.
• Unverified/unreliable assessment data.
• Wrong application of tax exemptions
• Misclassification of transactions.
• Not considering the documents/evidence provided by the taxpayer.

4. What are the consequences of mistakes in my tax return in the UAE?

• FTA may amend or impose penalties according to the error.
• Fiscal authorities may lodge a hearing request within the cut-off timeframe.
• Proper documentation and evidence

5. What procedures and steps does the FTA take to correct errors on tax returns submitted in the UAE?

• FTA carries out checks to confirm tax returns through assessments.
• Where mistakes are evident, assessments or penalties may be administratively imposed.
• Taxpayers can explain the facts by presenting evidence
• Reviews can be filed by the taxpayer or to manage conflicts and reconsideration requests.