The United Arab Emirates is one of the leading countries in the Arab region in establishing a fair and transparent tax system. Over the past years, the UAE has witnessed significant developments in this area, starting with the introduction of Value Added Tax (VAT) in 2018 at 5%, and ending with the imposition of a 9% corporate tax in 2023 on companies with income exceeding AED 375,000, This article explores in detail the tax system in the UAE, including the different types of taxes, the obligations of companies registered for VAT, the procedures for appealing decisions of the Federal Tax Authority, as well as the different tax rates applied.

Types of taxes in the UAE

  1. Value Added Tax (VAT): Value Added Tax (VAT) is an indirect tax imposed on most goods and services at all stages of the supply chain. This tax was introduced in 2018 at a rate of 5%, which is primarily borne by the end consumer. This tax aims to diversify sources of government income and enhance financial transparency in the UAE.
  1. Corporate Tax: In 2023, a corporate tax was introduced in the UAE at a rate of 9% on the net income or business profit of companies with an income exceeding AED 375,000. This tax aims to enhance financial accountability and ensure that companies contribute to the UAE’s economic development.
  1. Selective Taxes: Selective taxes are imposed on specific goods that are harmful to human health or the environment, such as soft drinks, tobacco, and energy products. Their rates range from 50% to 100% depending on the type of goods. These taxes aim to reduce harm to public health and the environment and limit the consumption of these products.
  1. Other Taxes: In addition to the above taxes, there are other types of fees and taxes in the UAE, such as registration and licensing fees, municipal fees, and tourism fees. These fees aim to finance government services and regulate economic activities in the UAE.

Obligations of VAT registered companies

  • Registration: All companies with annual sales exceeding AED 375,000 must register for VAT. This registration enables companies to collect tax from their customers and submit periodic tax returns.
  • Issuing invoices: VAT registered companies are required to issue invoices showing the value added tax on all goods and services they provide. This procedure ensures transparency in the tax collection process.
  • Paying tax: VAT registered companies must pay the tax due to the Federal Tax Authority periodically according to the specified deadlines. This procedure contributes to achieving tax compliance.
  • Submitting tax returns: VAT registered companies are required to submit periodic tax returns to the Federal Tax Authority. This procedure enables tax authorities to monitor companies’ compliance and collect the taxes due.

Procedures for appealing Federal Tax Authority decisions

In the event that companies are not satisfied with the decisions of the Federal Tax Authority, there are specific procedures for appealing those decisions:

  • Request for review of the tax assessment:
  • Any person may submit to the Authority a request to review the tax assessment issued in respect of him or part thereof and any administrative fines associated with it.
  • The request must be submitted within (40) forty business days from the date of notification of the person of the tax assessment and the associated administrative fines.
  • It will be decided by a decision within (40) forty business days from the date of receipt of the aforementioned request.
  • Request for reconsideration:
  • Any person may submit to the Authority a request to reconsider any decision or part thereof issued by it regarding him, provided that the request is justified within (40) forty working days from the date of notification.
  • Tax Dispute Resolution Committee:
  • One or more permanent committees called the “Tax Dispute Resolution Committee” shall be formed, headed by a member of the judiciary and including two experts registered in the roster of experts.

The committee shall be competent to do the following

  • Decide on objections submitted to the Authority’s decisions regarding requests for reconsideration.
  • Decide on requests for reconsideration that were submitted to the Authority and on which no decision was taken in accordance with the provisions of this Decree-Law.

Procedures for submitting an objection and cases of its non-acceptance

  • The objection to the Authority’s decision regarding the request for reconsideration shall be submitted within forty working days from the date of notification of the Authority’s decision.

The objection submitted to the Committee shall not be accepted in any of the following cases

  • If the request for reconsideration was not initially submitted to the Authority.
  • If the full tax associated with the objection is not paid.

The Committee’s decision shall be final regarding the objection if the total tax due and administrative fines thereunder do not exceed (100,000) one hundred thousand dirhams, In all cases, tax dispute lawsuits shall not be accepted before the competent court if the objection is not filed before the Committee initially.

Without prejudice to the provisions of Articles (34) and (37) of this Decree-Law, the Authority may, as the case may be, appeal the Committee’s decision before the competent court within (40) forty working days from the date of notification of the Authority or the person, as the case may be, of the Committee’s decision, in any of the following two cases:

  • Objection to the Committee’s decision in whole or in part.
  • Failure to issue a decision by the Committee regarding an objection submitted to it in accordance with the provisions of this Decree-Law.

Finally: Tax Refund

  • The taxpayer is entitled to submit a request to refund any tax he has paid if he is entitled to refund it according to the tax law and it is determined that the amount he has paid exceeds the tax due to be paid and administrative fines according to the procedures specified in the executive regulations.
  • The Authority must offset the amount required to be refunded with any other tax due or administrative fines that are not disputed by the taxpayer to submit a refund request according to the tax decision or tax assessment issued by the Authority before refunding any amount related to a specific tax.
  • The Authority may refrain from refunding any remaining amount in any of the following cases:
  • If it becomes clear to it that there are other disputed tax amounts related to that taxpayer.
  • If the person is subject to a tax audit

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