On July 19, 2024, the Federal Tax Authority, UAE issued Decision No. 5 of 2024 regarding the refund of fees for private clarification requests. This decision will be published in the government’s official gazette and will take effect from August 1, 2024. This new refund policy reflects the Federal Tax Authority’s commitment to maintaining transparency in the taxation process by encouraging taxpayers to seek clarifications regarding their tax queries without facing any financial setbacks. This article will explore the details of the new refund policy and its implications for taxpayers.
What are Private Clarification Requests?
Private clarification requests refer to the queries submitted by taxpayers to the Federal Tax Authority seeking clarification regarding specific tax-related matters or interpretation of certain tax provisions. The purpose of these requests is to clear one’s doubts about the application of tax laws to a particular situation or transaction. The FTA responds to such queries so that taxpayers can effectively comply with the relevant tax regulations and avoid the penalties related to non-compliance. However, there are certain situations in which FTA doesn’t entertain private clarification requests and offers a refund policy instead.
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Fees for Private Clarification Requests
The fees for submitting a private clarification request to the tax authority are as follows:
- AED 1,500 for a clarification request related to one tax only.
- AED 2,250 for the request regarding multi-tax clarification.
An Overview of the Decision
Decision No. 5 of 2024 outlines the refund policy for non-issuance of private clarification and specifies those instances in which the tax authority doesn’t entertain private clarification requests.
According to Article 1 of Decision No. 5 of 2024, if the Federal Tax Authority refuses to clarify a tax-related query, the application fee will be refunded to the taxpayer who requested a private clarification.
The service fee for private clarification shall be refunded to the applicant as per the following:
Single Tax Clarification:
When private clarification is requested regarding a single and no clarification is issued by the FTA, the paid fee is fully refunded.
Multiple Tax Clarification:
If private clarification is requested regarding more than one tax and the tax authority clarifies only one tax-related query, then a portion of the service fee is refunded. This portion is equivalent to the difference between the service fee for a private clarification request regarding more than one tax and the fee for clarification request regarding one tax. Similarly, if the request involves multiple taxes and no clarification is issued, the full fee will be refunded.
Article 2 of the Decision provides information about the instances when the tax authority doesn’t issue private clarification as per the taxpayer’s request. Those scenarios are discussed below:
Withdrawal of clarification request:
The applicant is eligible for a refund if he/she withdraws the private clarification request within two business days from the submission of the request application.
Inquiry by non-registered applicants:
The Federal Tax Authority doesn’t issue private clarification if the request is made by someone who is not a corporate tax registrant or if the topic of inquiry is not relevant to corporate tax registration matters.
Clarification request during an ongoing audit
The applicant isn’t eligible for a private clarification request if he/she is undergoing a tax audit by the Federal Tax Authority at the time of request submission.
Clarification Requests Addressed by Existing FTA Decisions:
FTA does not entertain a private clarification request if it pertains to procedures that have already been addressed in a decision issued by the authority. The reason being that the relevant procedures and guidelines are already clear from the existing decision, making further clarification unnecessary.
Duplicate clarification requests:
The Federal Tax Authority does not issue clarification regarding duplicate requests whereby the request made by the applicant is identical to the request submitted before by the same applicant with the same subject and documents. The authority does not entertain such private requests because they are already working on the previous one.
Request about the subject under legislative amendment:
Clarification is not issued if the private request is made regarding a tax-related matter that is currently under discussion for revision between the Federal Tax Authority and the Ministry of Finance. The new regulations regarding the issue might be introduced soon that will be sufficient to address the ambiguity at hand.
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Conclusion:
The latest refund policy about private clarification requests reflects UAE’s supportive approach towards the taxpayers, providing them with clear-cut tax guidelines and safeguarding them from financial setbacks. It’s crucial for the taxpayers in UAE to have knowledge about the specific instances in which the Federal Tax Authority doesn’t entertain private clarification requests. By staying informed about these guidelines, taxpayers and businesses can effectively navigate the UAE’s tax system, ensuring their inquiries are appropriate and well-founded. Taxpayers can also seek guidance from a reputed tax consultant in the UAE to ensure compliance with the relevant tax regulations.
Shayan Khan is an experienced Corporate Tax Consultant with over 4 years of expertise. He’s skilled in negotiating and investigating taxes with government bodies like the Federal Tax Authority. Shayan is really good at reviewing and drafting tax papers and offers strategic advice on complex tax matters. Clients trust his guidance in navigating tax procedures and minimizing liabilities.