UAE VAT Penalty Reconsideration

The Federal Tax Authority (FTA) can impose penalties on VAT- and corporate tax-registered businesses for non-compliance. However, taxpayers can apply for reconsideration if they meet certain conditions.

The UAE introduced Corporate Tax in 2023, which applies to UAE nationals/residents carrying out business activities. VAT Penalty Reconsideration also applies to Corporate Tax penalties.

According to experts, reconsideration allows waiving or reducing penalties for genuine reasons, avoiding unnecessary costs.

Key Takeaway

• VAT-registered businesses can apply for reconsideration if eligible.
• Meet the criteria, pay the penalty, and provide documents.
• The FTA reviews requests within 40 days - and can fully waive, reject, or reduce.
• Can appeal with TDRC in 20 days for a fee of AED 10,000.
• Consult experts like FinHubMiddleEast for assistance on the process.

Eligibility Criteria

To be eligible for reconsideration in the UAE, the taxpayer must:

• Be registered for VAT/Corporate Tax with the FTA
• Have a valid reason due to exceptional circumstances like disasters, illness
• Submit the request within 20 days of receiving the penalty notice
• Not have applied for reconsideration of the penalty previously

Supporting documents may be required based on the situation.

How to Apply

Taxpayers can submit the reconsideration request on the FTA portal after paying the penalty amount in full. The steps are:

1. Paying the VAT/Corporate Tax Penalty
2. Logging into the FTA portal
3. Filling out the online reconsideration form
4. Attaching supporting documents
5. Submitting the completed form

What to Expect

The FTA will review the request and notify the taxpayer within 40 business days.

Possible outcomes:

• Acceptance - FTA waives the penalty fully and refunds the amount.
• Rejection - FTA rejects and upholds the original penalty.
• Partial waiver - FTA reduces penalty based on circumstances.

Taxpayers can view the status on the FTA portal and get email notifications.

How to Appeal

If dissatisfied with the FTA's decision, taxpayers can file an objection with the Tax Disputes Resolution Committee (TDRC) within 20 days, along with a fee of AED 10,000. This fee is refunded if the objection is accepted.

The TDRC will independently review the appeal and can uphold, modify, or cancel the FTA's decision.

Conclusion

Applying for reconsideration can help businesses get unwarranted penalties waived or reduced. Consult tax experts like FinHubMiddleEast for assistance in optimizing tax liability.

FAQs