Private Tax Clarification declared indisputable

The UAE Federal Supreme Court has issued a judgment on disputes arising from tax private clarifications in April 2021.

The dispute was adjudicated before by the Dubai tax dispute resolution committee and also by the Federal Primary Court and the Federal Appeals Court.

The judgment was rejected by The Federal Supreme Court and ordered that private clarifications issued by the Federal Tax Authority do not fulfil the requirements that need to be disputed.

There was a certain level of ambiguity in regards to the disputes over private or public clarifications issued by the Federal Tax Authority.

They are disputes over decisions by the Federal Tax Authority that do not have an immediate monetary value.

There were multiple judicial interpretations on the issue as to whether a dispute that has no immediate monetary value can be accepted by the tax dispute resolution committees and Federal courts.

The Tax Procedures Law and the Cabinet Decision forming the tax dispute resolution committees need the tax dispute litigant to settle any taxes and/or penalties in dispute prior to object before the competent Tax Disputes Resolution Committee

(TDRC). It enunciates that tax disputes require a monetary value to be attached to the dispute.

General administrative law grants any person the right to dispute an administrative decision if that decision changes the legal position of the person subject of that decision, or if that decision affects the interest of the disputing person.

In a few scenarios, disputes over private clarifications were accepted by the tax dispute resolution committees while in other cases such disputes were rejected. 

The Federal Primary Court and the Federal Appeals Court had accepted disputes under similar situations.

In April 2021, the Federal Supreme Court addressed this issue for the first time. The court interpreted that it came to reason with private clarifications, not being administrative decisions as in they are not disputable decisions because they do not alter nor cancel the legal position of the person to whom the decision is addressed.

To provide an account of the nature of private clarifications issued by the Federal Tax Authority, the Court compared private clarifications to internal guidelines, and legal reports and commentary.

The Court had finally established that a private clarification cannot be disputed until such clarification results in tax or penalties being applied to the disputing person.