How to Challenge a Federal Tax Authority Penalty in the UAE

To challenge a Federal Tax Authority penalty in the United Arab Emirates, you must follow the objection procedure set out in Federal Decree-Law No. 7 of 2017 on Tax Procedures, which governs all tax disputes-from filing an objection with the Tax Disputes Resolution Committee to pursuing further relief in the civil courts.

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HOW DO I FILE AN OBJECTION TO AN FTA PENALTY?

You must submit a written objection to the FTA within the period stated in the penalty notice. The objection should clearly explain why you disagree with the penalty and attach all supporting evidence. It is addressed to the Tax Disputes Resolution Committee and must be lodged through the FTA's online portal using UAEPass authentication.

The Tax Procedures Law requires that the objection be filed within the timeframe indicated in the penalty decision. If the notice does not specify a period, the default period is thirty days from the date of notification. A valid objection must contain:

1. A copy of the penalty notice.
2. A detailed statement of facts that outlines the grounds for disagreement.
3. Any relevant contracts, invoices, accounting records, tax returns, or payment receipts that substantiate your position.
4. A power of attorney if the objection is filed by a representative.

The FTA's portal guides you through each step and generates an acknowledgment receipt with a reference number once the submission is complete. Failure to attach the required documents may render the objection inadmissible, prompting the authority to request clarification before it can proceed.

WHAT IS THE TIMELINE FOR PROCESSING AN OBJECTION?

After the FTA receives a properly filed objection, it must issue a decision within sixty days. If the committee needs additional information, it may extend the period by a further thirty days, provided it notifies the objector in writing.

According to the Tax Procedures Law, the TDRC shall review the objection and render a decision within two months. Should the committee require supplementary documents or expert opinions, it may grant a single extension of up to thirty days, after which a decision must be issued. The FTA communicates any extension via the online portal, and you can track the status of your case in real time. If the FTA fails to issue a decision within the stipulated period (including any lawful extension), the objection is considered rejected by default, allowing you to escalate the matter to the next level of appeal.

WHAT DOCUMENTS ARE REQUIRED TO SUPPORT MY OBJECTION?

You must provide the penalty notice, a factual statement explaining why the penalty is incorrect, and all underlying records that substantiate your position, such as tax returns, payment receipts, and relevant correspondence.

The FTA's Administrative Penalty Waiver Request guidance stresses that the objection must be accompanied by evidence that directly contradicts the basis of the penalty. This includes:

• The original tax return or declaration that triggered the penalty.
• Bank statements showing payments made or funds transferred.
• Contracts or invoices proving the nature of the transaction under review.
• Any expert reports or legal opinions that support your interpretation of the law.

Documents should be submitted in PDF format, clearly labeled, and indexed in an annex to the objection letter. Missing or illegible documents may lead the FTA to request a resubmission, thereby delaying the process.

WHAT APPEAL PATHWAYS EXIST IF MY OBJECTION IS DENIED?

If the TDRC rejects the objection, you may file a formal appeal with the Federal Tax Appeals Committee within thirty days of receiving the decision, and thereafter pursue litigation before the UAE civil courts if the administrative appeal is unsuccessful.

The Tax Procedures Law provides a two-stage administrative remedy:

1. First stage - Appeal to the Federal Tax Appeals Committee (FTAC). The appeal must be lodged within thirty days of the TDRC's decision. The FTAC reviews the case de novo and may uphold, vary, or annul the penalty.
2. Second stage - Civil court litigation. Should the FTAC's decision remain adverse, you may bring a claim before the competent civil court within thirty days of the FTAC ruling, citing procedural irregularities or substantive errors of law. Court proceedings follow the UAE Code of Civil Procedure, and the burden of proving that the penalty was incorrectly applied rests on the taxpayer.

Throughout both stages, representation by a licensed advocate is permitted, and all filings must be made via the UAE's electronic case management system.

WHAT IS THE LEGAL BASIS FOR FTA PENALTIES?

Federal Decree-Law No. 7 of 2017 on Tax Procedures authorizes the FTA to impose administrative penalties for violations such as late filing, inaccurate returns, or failure to register for VAT. The law defines the types of penalties, the maximum amounts, and the procedural safeguards available to taxpayers. It also sets out the objection and appeal mechanisms that form the core of the dispute-resolution process.

CAN I REQUEST A WAIVER OF THE PENALTY BEFORE FILING AN OBJECTION?

Yes. The FTA offers a voluntary disclosure and penalty waiver mechanism under the same Tax Procedures Law, allowing taxpayers to disclose omitted liabilities and request a reduction or waiver of associated penalties. The request must be submitted before the penalty becomes final and must include a full disclosure of the omitted amounts and supporting documentation.

HOW LONG DOES THE ENTIRE OBJECTION AND APPEAL PROCESS TYPICALLY TAKE?

While the law sets maximum periods-sixty days for the initial objection decision, thirty days for any extension, and thirty days for each appeal stage-the actual duration depends on the complexity of the case and the completeness of the submitted documentation. Straightforward matters may be resolved within three to four months, whereas cases requiring expert analysis or court litigation can extend beyond twelve months.

DO I NEED TO PAY ANY FEES TO FILE AN OBJECTION OR APPEAL?

The Tax Procedures Law does not prescribe a fee for filing an objection with the FTA or an appeal to the Federal Tax Appeals Committee. However, if the matter proceeds to civil court, standard court fees apply under the Code of Civil Procedure, which are calculated based on the claim value.

WHAT HAPPENS IF I MISS THE DEADLINE TO FILE AN OBJECTION?

Missing the statutory deadline generally results in the penalty becoming final and enforceable. The Tax Procedures Law does not provide for reinstatement of the objection period except in exceptional circumstances where the taxpayer can demonstrate force majeure or fraud, which must be proven before the TDRC. In such cases, a separate request for reconsideration may be submitted, but success is not provided.

CAN I SETTLE THE PENALTY DISPUTE THROUGH MEDIATION?

The UAE legal framework does not mandate mediation for tax disputes, but the FTA encourages parties to reach a settlement at any stage before a final court judgment. Settlement agreements must be in writing, signed by both parties, and submitted to the FTA for recording; they have the same legal effect as a decision of the TDRC or FTAC.

By following the steps outlined above-filing a timely objection, providing complete documentation, monitoring the processing timeline, and knowing the available appeal routes-you can effectively challenge an FTA penalty and protect your rights under UAE tax law.

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FREQUENTLY ASKED QUESTIONS

How do I file an objection to an FTA penalty?

You must submit a written objection to the FTA within the period stated in the penalty notice, explaining why you disagree and attaching all supporting evidence. The objection is addressed to the Tax Disputes Resolution Committee and lodged through the FTA's online portal using UAEPass authentication. If the notice does not specify a period, the default is thirty days from notification. The objection must include a copy of the penalty notice, a detailed statement of facts, relevant contracts, invoices, accounting records, tax returns, payment receipts, and a power of attorney if filed by a representative. The portal generates an acknowledgment receipt with a reference number upon completion.

What is the timeline for processing an objection?

After the FTA receives a properly filed objection, it must issue a decision within sixty days. If additional information is needed, the committee may extend the period by a further thirty days, provided it notifies the objector in writing. The Tax Procedures Law requires the TDRC to review and render a decision within two months, with a single possible extension of up to thirty days. Any extension is communicated via the online portal, and you can track the case status in real time. If no decision is issued within the stipulated period (including any lawful extension), the objection is considered rejected by default, allowing you to escalate to the next appeal level.

What documents are required to support my objection?

You must provide the penalty notice, a factual statement explaining why the penalty is incorrect, and all underlying records that substantiate your position, such as tax returns, payment receipts, and relevant correspondence. Specifically, include the original tax return or declaration that triggered the penalty, bank statements showing payments made or funds transferred, contracts or invoices proving the nature of the transaction under review, and any expert reports or legal opinions supporting your interpretation of the law. Documents should be submitted in PDF format, clearly labeled, and indexed in an annex to the objection letter. Missing or illegible documents may lead the FTA to request resubmission, delaying the process.

What appeal pathways exist if my objection is denied?

If the TDRC rejects the objection, you may file a formal appeal with the Federal Tax Appeals Committee within thirty days of receiving the decision, and thereafter pursue litigation before the UAE civil courts if the administrative appeal is unsuccessful. The Tax Procedures Law provides a two-stage administrative remedy: first, appeal to the Federal Tax Appeals Committee (FTAC) within thirty days of the TDRC decision; the FTAC reviews the case de novo and may uphold, vary, or annul the penalty. Second, if the FTAC's decision remains adverse, you may bring a claim before the competent civil court within thirty days of the FTAC ruling, citing procedural irregularities or substantive errors of law. Throughout both stages, representation by a licensed advocate is permitted, and all filings must be made via the UAE's electronic case management system.

What is the legal basis for FTA penalties?

Federal Decree-Law No. 7 of 2017 on Tax Procedures authorizes the FTA to impose administrative penalties for violations such as late filing, inaccurate returns, or failure to register for VAT. The law defines the types of penalties, the maximum amounts, and the procedural safeguards available to taxpayers. It also sets out the objection and appeal mechanisms that form the core of the dispute-resolution process. This decree-law governs all tax disputes, from filing an objection with the Tax Disputes Resolution Committee to pursuing further relief in the civil courts.

If your matter involves fta penalty in the United Arab Emirates, you are welcome to request a consultation with Nour Attorneys. Our team can assess your position under the law currently in force and outline the options available to you. Request a consultation

This article is provided for general informational purposes only and does not constitute legal advice. Reading this article or contacting Nour Attorneys through this website does not create an attorney-client relationship; such a relationship arises only after a conflicts-of-interest check and a signed engagement agreement. Do not send confidential information through this website; information submitted before engagement is not protected by legal privilege. Past results do not guarantee future outcomes. The firm's lawyers practice in the jurisdictions stated in their individual profiles; this article addresses the law of the United Arab Emirates only.