How to Appeal an FTA Penalty in the UAE: Step-by-Step Guide

Businesses and individuals in the UAE can challenge a Federal Tax Authority penalty by filing an objection within the statutory period and, if necessary, pursuing judicial review before the competent courts. The governing framework is Federal Decree-Law No. 7 of 2017 on Tax Procedures and its Executive Regulation, which applies across all emirates.

Related Services: Explore our Consumer Protection Disputes and Insurance Disputes services for practical legal support in this area.

WHAT IS THE DEADLINE FOR SUBMITTING AN OBJECTION TO AN FTA PENALTY?

The law requires that an objection be lodged within thirty (30) days from the date the penalty notice is served. Federal Decree-Law No. 7 of 2017, Article 13(1) prescribes this period, and failure to meet it results in the penalty becoming final and enforceable.

Upon receipt of the penalty notice, the taxpayer must prepare a written objection that states the grounds for disagreement, attaches any supporting documents such as tax returns, payment receipts, or correspondence, and submits it to the FTA's Objections Committee via the authority's online portal or in person at the designated office. The objection must be signed by the taxpayer or an authorised representative; if a representative acts, a valid power of attorney is required. The FTA acknowledges receipt within five (5) working days and issues a decision within sixty (60) days of receiving the complete objection. If the objection is rejected or only partially accepted, the taxpayer receives a reasoned decision that outlines the factual and legal basis for the FTA's position.

WHAT DOCUMENTS MUST ACCOMPANY AN OBJECTION TO AN FTA PENALTY?

An objection must include a copy of the penalty notice, the relevant tax return or declaration for the period in question, proof of any tax payments made, and any correspondence that shows the taxpayer's position. Federal Decree-Law No. 7 of 2017, Article 13(2) requires that the objection be supported by evidence that substantiates the claim of error.

In practice, taxpayers attach the original tax return filed for the period under review, bank statements confirming payment of the disputed amount, and any expert reports or audit findings that contradict the FTA's assessment. If the objection concerns a procedural issue, such as a missed filing deadline due to force majeure, the taxpayer should provide documentation that proves the occurrence of the event, such as official notices from relevant authorities or insurance certificates. All documents must be in Arabic or accompanied by a certified Arabic translation, as the Arabic text of UAE legislation as published in the Official Gazette prevails over any translation.

HOW DOES THE FTA REVIEW AN OBJECTION AND WHAT IS THE TIMELINE FOR ITS DECISION?

The FTA's Objections Committee examines the objection, verifies the attached evidence, and may request additional information or clarification from the taxpayer. Federal Decree-Law No. 7 of 2017, Article 13(3) obliges the Committee to issue a decision within sixty (60) days from the date the objection is deemed complete.

During the review, the Committee may schedule a hearing if it deems necessary to hear oral arguments; the taxpayer receives at least five (5) working days' notice of the hearing date, time, and venue. The hearing is conducted before a panel of tax officials, and the taxpayer may be represented by a legal counsel or tax consultant. After the hearing, the Committee deliberates and issues a written decision that either upholds, reduces, or cancels the penalty. The decision is communicated to the taxpayer via the FTA's portal and includes a summary of the findings, the legal provisions applied, and the amount, if any, that remains payable.

WHAT RECOURSE EXISTS IF THE FTA REJECTS THE OBJECTION?

If the Objections Committee's decision is unfavorable, the taxpayer may file a lawsuit before the competent civil court within thirty (30) days of receiving the decision. Federal Decree-Law No. 7 of 2017, Article 14(1) grants the right to judicial review, and the court having jurisdiction is the Court of First Instance in the emirate where the taxpayer resides or conducts business.

The lawsuit must include a copy of the penalty notice, the objection submitted to the FTA, the Committee's decision, and all supporting evidence. The claim should specify the relief sought, such as annulment of the penalty, reduction of the amount, or compensation for any damages incurred. Court fees are determined according to the Civil Procedure Law; the plaintiff must pay the prescribed filing fee before the case is docketed. The court proceeds with written pleadings, may order expert testimony, and ultimately renders a judgment that is binding on the FTA unless appealed further to the Court of Appeal and, if applicable, the Court of Cassation.

ARE THERE ANY COSTS ASSOCIATED WITH FILING AN OBJECTION OR A COURT CLAIM?

Filing an objection with the FTA incurs no administrative fee; the process is free of charge. However, if the taxpayer engages a legal representative or tax consultant, professional fees apply according to the agreement between the parties. Federal Decree-Law No. 7 of 2017 does not prescribe a fee for the objection stage.

When the matter proceeds to court, the plaintiff must pay the court filing fee stipulated under Federal Law No. 11 of 1992 on Civil Procedure, Article 9. The fee is calculated as a percentage of the claim value, with minimum and maximum thresholds set by the Ministry of Justice. Additional expenses may include expert witness fees, translation costs for documents not in Arabic, and attorney's fees. The losing party may be ordered to reimburse the prevailing party's reasonable legal costs, subject to the court's discretion.

FREQUENTLY ASKED QUESTIONS

What is the legal basis for the thirty-day objection period?
Federal Decree-Law No. 7 of 2017, Article 13(1) provides that an objection to a tax penalty must be filed within thirty days of notification. The Arabic text of UAE legislation as published in the Official Gazette prevails over any translation.

Can an objection be submitted after the thirty-day deadline?
The law does not allow late objections; once the period expires, the penalty becomes final and enforceable under Federal Decree-Law No. 7 of 2017, Article 13(4). No extension is granted unless the FTA acknowledges an administrative error, which is rare and must be proven with evidence.

Is it mandatory to attend a hearing before the Objections Committee?
Attendance is not mandatory unless the Committee specifically summons the taxpayer. Federal Decree-Law No. 7 of 2017, Article 13(3) states that a hearing may be convened at the Committee's discretion; the taxpayer receives notice if a hearing is scheduled.

What happens if the FTA does not issue a decision within sixty days?
If the Committee fails to decide within the statutory period, the objection is deemed accepted by default, and the penalty is cancelled or adjusted accordingly, as per Federal Decree-Law No. 7 of 2017, Article 13(5). The taxpayer should obtain written confirmation of the deemed acceptance.

Can the penalty be paid in instalments while the objection is under review?
Federal Decree-Law No. 7 of 2017 does not prohibit voluntary payment; however, making a payment may be interpreted as acceptance of the liability. Taxpayers should seek clarification from the FTA before effecting any payment during the objection process.

Which court hears tax disputes arising from FTA penalties?
The Court of First Instance in the emirate where the taxpayer resides or has its principal place of business has jurisdiction, as stipulated by Federal Decree-Law No. 7 of 2017, Article 14(1). Appeals proceed to the Court of Appeal and, if applicable, the Court of Cassation.

Contact Nour Attorneys for a consultation.

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