The legal regulation of issuing clarifications in the UAE has now got its legal framework with the issuance of Decision No. 5/2024 by the FTA. These Clarifications are official documents that offer rulings regarding certain transactions from the perspective of tax legislation, which assists businesses and people in dealing with the intricacies of distinguished tax codes. This paper discusses the clarification aims and objectives, domains, submission procedure, and other features to raise awareness among the applicants.
Purpose of Clarifications
Explanations are intended to convey the FTA’s perspectives regarding the application of taxes on certain undertakings. The main goal is to provide recommendations on how it is possible to implement these laws in a proper manner taking into account the information, which is presented by the applicant. As the FTA started by responding to the facts produced by PFCU, it is crucial to mention that no corroborative check of facts takes place in the FTA. As such, there is a need to ensure that the applicants get it right as far as writing their information is concerned. Clarifications are unique to the applicant and the transaction(s) of a particular deal. This goes to show that when requesting a Clarification it is important to provide accurate detailed information.
Instances Where Clarification Requests May Be Rejected
From the above analysis, the FTA has pointed out some cases they shall not issue a Clarification. These include:
The FTA will declare the dates for filing of requests for the Clarification of Corporate Tax. Thus, requests that have been submitted and classified as part of clarification requests include reconsideration appeals, administrative penalty waivers, and system technical inquiries. They should not be confused with clarification requests as they are processed through other specific channels.
Who Can Submit a Clarification Request?
A Clarification may be tendered by anyone and is not limited to those in the legal profession so long as the conditions that relate to the provision of a clarificatory statement are met. A candidate must have a clear understanding of the tax laws, regulations, and the FTA publications but despite this come to the interview with a situation where one is not sure on how the law applies. The applicant must therefore have an interest in the matter which simply means that the issue affects their operations.it is important that if the Clarification request is submitted by the person who received the supply made by another individual, the guidance will be provided only as to how the facts in the applicant’s case are affected. In this case, the supplier cannot rely on the issued Clarification and moreover, they are not even the applicant.
In regard to the tax registrants, the Clarification form should be forwarded by the signatory through the prescribed email address in the FTA. Any person who is not a registrant has to present valid evidence of authorization to prepare the request. Pursuant to the requirements set out in the implementing regulations, it is not necessary that the applicant should be a taxable person or that he has appointed a tax consultant in UAE.
How to Submit a Clarification Request
The Clarification form can be filled by an applicant and sent using the Emaratax option available on FTA’s website. There is also a more detailed guide of the measures that the clients have to take on the website, including the steps for filling in the application and its submission.
Filing Of Application By 3rd Party:-
A person who is looking for a Clarification or his or her authorized signatory is usually supposed to send the Clarification form. But, the tax agents or lawyers are allowed to submit their representations. And so, it can also be managed if the representative of the tax group member signs the application. Of course, Clarification submissions by agents who have not registered as tax agents also are not allowed.
Completing the Clarification Form
The Clarification form contains the collection of key information that provides the competent authority, the FTA an erudite response. The aforementioned sections are:
Applicant Information: The prepopulating of the registrant’s details in it, for unregistered persons, special disclosure obligation requirements may be taken into account.
Contact Details: Further includes the actual physical address and email contact of the applicant, if available.
Request Details: It specifies the type of tax, impacted amount, and tax period among other things on the desires of the prospective party.
Background and Facts: Brief summary of the transactions and their document evidence
Technical View: Legal and FTA guidance, along with technical analysis promotion.
Review and Declaration: Review of the provided information along with a declaration performed by the authorized signatory.
Fees for Clarification Requests
From June 1, 2023, an extra payment shall be made for sending private questions for Clarification. The payment you will do will be AED 1500 for an application for a single tax type, and the application with more than one type.
To be sure that questions in the request are about the same thing and their subjects are the same, to be able to get the AED 2,250 fee, if separate applications are required for the transactions of different parties.
Commonly, fees will not be refunded so it is necessary to make sure that applications are valid, correct, and complete prior to submission. Nevertheless, the FTA as the case may be, may refund the fee if the Requested Clarification is not given.
FTA Response Time
A Clarification request to the FTA usually takes a maximum time of 50 business days to receive a response. The application may not be complete or it might require additional information, the 50 business days will asses from the time the additional information necessary is received. This may also be extended for a response time of 50 business days for cases of complexity or involving other governmental bodies. The applicants can see the status of their application on the dashboard of the Emaratax portal
Disputing a Clarification
Applicants are not able to apply for consideration or review of a Clarification. Nevertheless, if there is significant new information that has not been previously revealed to the FTA, the applicant may present a new Clarification request.
Saving and Updating Your Application
You have the option of saving your application as a draft and resuming it later. Nevertheless, if the application is not submitted within 10 business days of the initiation date, the draft will be automatically canceled. Through your registered email or verified mobile number, you will get reminders to finish and submit your application.
