UAE Taxpayers can point out errors during the tax assessment process in the UAE under the FTA’s robust tax framework. This would bring forth the need to know the valid grounds of review as such will be crucial for corporates and individuals that find themselves amid Taxation in the UAE.
The following is an extended description of these grounds, their importance, and their consequences.
- Errors of a Technical Type: Technical errors happen when specific laws are incorrectly applied to cases. This may include the revision of the provisions of the Federal Decree-Law on Taxation. For example, a taxpayer has been placed within the wrong tax bracket or placed under obligations that do not match the scope of their business. Such errors are common due to the laxity in defining the regulations thus as a rule of thumb, a tax specialist must be contacted to avoid such situations.
- Errors in Computation of Tax Liability Calculation Accuracy Deficits:- Calculation missteps frequently account for the tax authorities review. They are performed in the taxpaying process: calculating the gross income, computing the total deductions allowed, or determining the overall credits claimed. A majority of the time, such errors together with their rebuttal have been regarded in the course of the tax activities whether bookkeeping and or accounting records are maintained. Cross-verification of accounting books assists to minimise this kind of error. However, if the mistakes take place, the taxpayer can appeal for reviewing a decision made by the tax authority. It is easy to attempt altering the position of the tax authority. The taxpayer sure is always right but unfortunately has not been able to stand up against the whole system.
- Defective Tax Procedures or Legal Breach in Procedures:- Tax investigation procedures involving tax assessments are always complicated in that they are regulated through legislation. Spelling out detailed procedures or defined guidelines minimizes the concerns of experts failing to follow due procedural requirements during the course of tax assessment. During investigations, tax-paying individuals frequently complain of inadequate communication being addressed by FTA officials and also indiscriminate abuse of power by investigators. Such complaints may be critical to guarantee employees work within the required system.
- Breaches of Time:- Regarding the Statutory Provisions Limitations of Tax Assessments in the U.A.E, these are also governed by time limits which if exceeded, the FTA is barred from conducting an audit or levying tax. Where, however, an audit was carried out or an assessment conducted outside the time limits which the law prescribes, the taxpayer is at liberty to contest the assessment on those grounds. These time limits ensure that taxpayers are not subjected to continuous risk of retrospective assessments which weaken the certainty and stability of the tax system.
- Spontaneous Hearing Receipts:- taxpayers should not be placed at the risk of hearing notices or information data requests without proper contact. A failure to notify the taxpayer with reasonable advance notice and in a straightforward manner violates the taxpayer’s involvement in the assessment process. This ground of appeal helps uphold the right of taxpayers to get ready for the audits and prepare their appropriate responses to the questions posed by the FTA.
- Assessments Not Validated By External Evidence:- Once the FTA decides to take an opinion using external data that is connected to an audit assessment but is not proven by any form of external evidence, the assessment, in general, has legal grounds to be contested. For example, determining tax liabilities based on unverified statistics or third parties without proper subsistence of the figures may cause losses. Such assessments based on such data are contestable, indicating that they emphasize the need for thorough and accurate evidence.
- No Additional Evidence Initiated Upon Request:- There are instances when tax evaluations can take place in the absence of the FTA asking for the appropriate supporting documents or seeking clarification from taxpayers. They possess enough evidence which could have led the taxpayer’s adverse outcome to emerge entirely different had it been requested. It is important that all the relevant information is evaluated before making a decision, especially when determining tax liabilities.
- In Errors Made in Respect of Certain Tax Treatment of Transactions:- Inappropriate designation or categorization of business activities in terms of tax purposes may result in inaccuracies pertaining to liabilities. For instance, a certain activity can be deemed a figured business when it is actually an exempt activity or allowable deductions are not allowed without cause. These errors however have to be corrected to ensure that there are no unnecessary expenses.
Conclusion
Tax assessment reviews in the UAE are useful for those taxpayers whose assessments were not correct or they were unfair. Identification of specific grounds such as technical issues, procedural blunders, or unwarranted evidentiary deference to external sources and information makes it possible for the taxpayer's business or individual to effectively deal with the review. The services of Tax Consultant Dubai and a well-maintained document trail acts to increase the likelihood of having a good outcome to the assessment review while at the same time ensuring that one is in line with the developing UAE tax systems.
