Are you aware of the new Tax principles established by the UAE Federal Supreme Court?

No worries, we are decoding the recent tax principles for taxpayers, tax advisors, and tax litigators through our new segment What Does That Mean? Here, things are Swift, Simple, and Sharp!

Key Tax Principles:

1. Legislative Authority Holds the Highest Power: TAXES COME FROM LAWS…

Taxes are determined by laws passed by the government. The court rules about how much tax to pay and how to settle it must come directly from these laws.

2. Following the Law with Precision: NO ROOM FOR MISINTERPRETATION…

Tax decisions by the FTA must follow the law, and due dates for tax payments are based on legal rules, not when the decisions are made. This highlights how crucial is to handle taxes in accordance with the law.

3. Different Penalties for Different Situations: MISTAKES ARE MISTAKES. BUT…

The FTA can penalize you for not paying enough taxes, even if you admit your mistake. But it will be different if you admit a mistake in your tax voluntarily from those for paying your taxes late.

4. Adding Up Penalties for Multiple Mistakes: THERE IS A DIFFERENCE…

If you make errors related to a specific tax law, you’ll face penalties for each mistake you admit, says Article 55 of the VAT Executive Regulation.  Hence, there is a distinction between primary tax laws and how taxes are processed.

5. Following the Right Steps to Get Penalties Waived: ABIDE THE LAWS…

If you want to avoid penalties, you must follow the steps outlined in the Tax Procedures Law. You can’t ask the courts directly to remove penalties which emphasizes the importance of adhering to FTA’s procedures.

In a nutshell by MS

The recent decision by the Federal Supreme Court contributes to the establishment of a fair and organized tax system through the management of taxes in the UAE, emphasizing the significance of law adherence, procedural consistency, and a clear understanding of roles within the tax system. The ruling ensures that individuals and businesses fulfill their financial obligations and maintain the integrity of the UAE’s tax structure. It brings out greater clarity in laws avoiding the complexities and confusion which can ultimately save valuable time for companies.

Disclaimer:  Content posted is for informational & knowledge sharing purposes only and is not intended to be a substitute for professional advice related to tax, finance or accounting. No warranty whatsoever is made in this regard, and it is not intended to provide and should not be relied on for tax or accounting advice. The content posted is subject to future amendments / changes / clarifications in the regulation by the authorities. For any clarifications, you may contact our tax team.