UAE Tax Assessment Review Process

Public Clarification TAXP008 issued by the UAE Federal Tax Authority (FTA) specifies the circumstances under which taxpayers may apply for reviews of tax assessments in relation to corporate tax, excise tax, and VAT. Based on Federal Decree-Law No. 28 of 2022, such an optional pathway permits disputes regarding assessments and/or their penalties without the need to apply for reconsideration first. A reconsideration process is administered by impartial officials of the FTA where there are audit errors, omissions, and procedural deficiencies. New evidence invalidates this process and necessitates the request for reconsideration. This guide provides comprehensive information regarding tax assessment reviews and reconsideration requests, so that the procedures and their relevance may be better appreciated.

What is a Tax Assessment Review?

A tax assessment review is a way for the taxpayer's entities to challenge tax assessments and penalties that they deem inappropriate in their tax affairs. These reviews are conducted by independent Federal Tax Authority (FTA) officials who were not involved in the initial audit per se, thus the need for subjectivity in the taxation system.

The review assesses:

• The correctness of the facts and evidence presented.
• The observing of the procedures as stipulated in the audit guidelines.
• The soundness of the conclusions arrived at based on the findings made in the first stage.

Why is a Tax Assessment Review necessary?

A tax assessment review is corrective in the sense that it seeks to expunge errors in the system and also make it equitable. Ordinary reasons for a review include:

• Inadequate or Incorrect Application of Law: Pertaining to cases where there was goodwill in the understanding or application of some provisions of the tax or tax treaties.
• Mistakes in Computation: That is, mistakes have been made in the computations resulting in errors with respect to the tax assessment.
• Mistakes of a Procedural Nature: These are quite common in most audits as there are bound to be slip of hands during the actual examination that lead to wrong outcomes.

In case there is new evidence, a request for reconsideration — not for a tax assessment review — should be sought.

What are the Tax Assessment Review Conditions?

The scrutiny can be extended provided the individual can show that the original audit was conducted unprofessionally. The verification material must have been prepared for the actual audit only and not later than the time from which the audit advice was given up to the period of the assessment.

Examples of Relevant Contentions against Review

Contention	Description
Statute barred period	You will go to plead that the audit sought to cover a period that is beyond legally allowed limits.
No audit notified	Established by the tax auditor that a prior notification for an audit was not served to the taxpayer.
Uncertified sources	Certain external confirmations did not apply and were not backed by documents.
Errors in estimations	Cases where the excise tax or supply values figures were under or over how they ought to be.
Mis-timed tax issues claim	Tax issues were raised that had a time that was outside that of the audits.
Failure to send audit reports	In a situation where the taxpayer’s registered address does not have the result sent out to them.

Guidelines for Making a Tax Assessment Review Request

How to initiate tax review proceedings

• Legitimate Grounds: Make sure that the request has a basis as provided in the review eligibility guidelines. For example, one may argue that the conditions as stated in the shape of hard evidence have been met.
• Deadlines for Submission: Your application should not go beyond 40 business days starting from the moment when notice for tax assessment was made.
• Submission of the Sources: Only evidence that was given in the first audit should be used only as sources.

Exceptions :

You cannot submit a review request if :

• A request for reconsideration has been filed prior.
• You are planning to introduce fresh evidence not available at the previous audit.

FTA Review Process and Outcomes

Once the FTA recognizes the review request filed to it:

• The officials, who are independent of the managing authorities, examine the evidence and carry out the reconnaissance audit.
• A decision is reached no later than within 40 days from the date the request has been lodged, unless an extension has been granted.

Possible Outcomes

Outcome	Explanation
Request Rejected	There is no change in the tax assessment that was made in the first instance.
Adjustment Made	Where errors have been detected, rectification is done, and the assessment is modified accordingly.
Original Decision Upheld	There are no changes made to the previous assessment.

What is a Reconsideration request?

If you have filed a notice, or the FTA has failed to act within 40 days from the day a request for tax assessment was reviewed, you may lodge a request for reconsideration. In this particular case, you can present new evidence or documents which were not available before.

When to File a Reconsideration Request

• In the course of making an application for consideration of the review.
• Where else no substantive decision has been made by the FTA, within the timeframe provided.

 

Key Differences: Tax Assessment Review vs Reconsideration Request

Aspect	Tax Assessment Review	Reconsideration Request
Objective	To only deal with problems related to procedure or calculation faults.	To resolve disputes with supporting documents that were not presented during the hearing.
New Evidence	Not permitted.	Permitted.
Submission Deadline	About 40 business days since the assessment was received.	After receiving a decision of review or failure to do so within the specified timeline.
FTA Response Time	Constructive 40 business days (but extension allowable).	Depends on the scope of the evidence being presented.

 

Conclusion

The tax assessment review procedure enables taxpayers who have made mistakes either in the procedure or in the calculations to correct such errors. There is a request for reconsideration of new evidence in instances where new evidence is required. Knowledge of these processes and procedures can assist the business as well as the individuals in protecting their own interests and achieving correct taxation results can contact a corporate tax consultant in UAE for better guidance.

 

Frequently Asked Questions

What are common errors that lead to tax assessment reviews in UAE?

The most common errors that result in assessment review include:

• Mistakes of a technical nature: Application of tax law or regulation in an incorrect manner.
• Mistakes of calculations: Any arithmetical errors in respect of tax liabilities.
• Procedural Errors: Failure of the taxpayer or FTA to adhere to the audit procedures.
• Assaults with a statute of limitation: Holding audits beyond the permissible limits.
• Failure to notify: Notify a taxpayer to be sure of an impending audit.
• Unsupported external dependence: Documentation of external data should be established.
• Failure to make further requests for evidence: Failure to make further requests for supporting evidence.
• Mistakes of tax treatment of transactions: Taxing the transactions under the incorrect head.

How can I avoid mistakes in my UAE tax return?

To avoid errors while filing your tax return in the UAE, these precautions should be put in place.

• Appropriate financial record management procedures: Financial records maintained inaccuracy and up – to – date.
• Correctly classify transactions: To properly classify all transactions by the legal provisions regarding taxation.
• Proper and correct application of allowable expenses: Knowledge of expenses that qualify for deduction and their application.
• Monitoring and keeping abreast with the changes in tax laws: Monitoring and modifying tendencies concerning tax laws and regulations.
• Engage a tax expert: Where there is uncertainty over any area of tax then a tax advisor should be sought – out.

What are valid grounds for requesting a tax assessment review in the UAE?

Grounds of appeal against a tax assessment in the United Arab Emirates include the following important points:

• Mistakes of a technical nature: Application of tax law in an inappropriate manner.
• Calculation mistakes: Inability to accurately determine the numerical values of the debts owing taxes.
• Procedural errors: The audits did not follow defined procedures as per FTA.
• Statute of limitations violations: The FTA allows audit periods subject to reasonable limits.
• Lack of notification: A situation where a relevant taxpayer is informed of an impending audit.
• Unsupported reliance on external data: Substantiating claims with external sources which have not been substantiated.
• Failure to request additional evidence: Evidence sufficient to prove the claim has not been called for.
• Errors in tax treatment of transactions: The transactions have been erroneously so taxes are treated.

What happens if there are errors in my tax filing in the UAE?

If there are errors in your tax filing in the UAE:

• Administrative penalties: For such errors, you can expect to be imposed both the fine and the penalty.
• Interest charges: Taxes that have not been paid can also attract further interest charge.
• Tax audits: The FTA could issue a tax audit to clear the errors.
• Enforcement actions: Such outcomes could include the imposition of fines or other applicable sanctions.

How does the FTA handle tax return mistakes in UAE?

The FTA handles tax return mistakes in the UAE by:

• Conducting tax assessments: Assessment and evaluation of the tax returns for correctness.
• Issuing notices: Notices will be issued concerning errors/discrepancies.
• Opportunity for review: Having such a review of the assessment is to enable a taxpayer to present any reassessment.