What Is the Process for Applying the Clarifications?

In the ever-changing world of tax, many individuals and businesses face complicated situations where the enforcement of the law might not be clear. The UAE Federal Tax Authority (FTA), in order to promote compliance and resolve such confusion, has put in place an orderly clarification process. This system ensures compliance by enabling taxable persons to apply for tax technical guidance for specific issues. Knowing this process will help in effective compliance and tax management in the UAE.

EmaraTax Gateway: Your Starting Point

The entire clarification process was originally integrated into the refined digital platform of the FTA, EmaraTax. This means that all requests, communication, and eventually, the release of clarification, are carried out online through the portal. To start a request, the applicant must first have an active user profile on Emaratax. For the new people on the platform, the FTA provides extensive resources, such as "Emaratax Register as an online user - user manual," easily accessible on their website, to guide users through the profile construction process.

Crafting Your Clarification Request: Language and Detail

One of the first ideas for any applicant is the language. FTA accepts clarification requests in both English and Arabic. It is important that the clarification be published in the same language as the request presented. Therefore, it is important for the applicant to determine their language before starting the application to get answers in the desired format.

To submit a request, the applicants must navigate the "Tax Clarification Request" tile on the FTA website after they log in to their EmaraTax profiles. The online form requires careful implementation of all compulsory areas, with extensive subsidiaries. This is the place where the depth of your request actually comes into play.

Essential Supporting Evidence:

1. A wide cover letter: This is the cornerstone of your request. It should clearly outline:

• Background Facts: An intensive and accurate detail about the status or transaction that needs clarification.
• Special Tax Technical Query: An accurate question about the tax treatment of the case. There can be a delay in or a less certain explanation if the query is not clear.
• Relevant UAE Tax Law: Show that you have already reviewed laws, regulations, and public guidance. This reflects the right hard work and helps the FTA to understand your existing analysis.
• Applicant's Technical Approach: Based on your understanding of laws and facts, make your interpretation of tax treatment.
• Any Optional Tax Treatment: If you have considered other possible taxes, you can present them to the FTA.

2. Documentary evidence: It provides an actual basis for your request. This may include a wide range of documents such as:

• Contract
• Challan
• Correspondence
• Other relevant items that support the facts presented in the cover letter

3. Third-party tax advice: If you have received tax advice from external advisors or legal professionals like CDA in the first specific case, it should be uploaded as part of your request. This helps the FTA to understand the current expert opinion.

Clarification Request Fees

Submitting a clarification request comes with a non-refundable fee. For a request concerning a single tax, the fee is AED 1,500 per application. If the request has multiple tax types, the fee increases to AED 2,250 per application. These fees are payable exclusively via a valid bank card through the EmaraTax portal. It's critical to remember that these fees are generally nonrefundable, with very limited exceptions.

You can also read: What Are the Eligibility Criteria to Apply for the Clarifications?

Submission and Tracking

Once you have meticulously completed the form, uploaded all necessary documents, and are ready to finalize your request, you can submit it. The EmaraTax platform allows applicants to save draft versions, offering flexibility. However, a crucial deadline applies: the request must be submitted within 40 business days from the date it was initiated on EmaraTax; otherwise, it will be automatically closed.

Withdrawal and Validation

Applicants retain the option to withdraw their clarification request. However, the non-refundable fee will typically be forfeited unless the withdrawal occurs within two business days from the date of submission.

Following submission, the FTA undertakes a crucial step: validation of eligibility. They will review the request to ensure the applicant is indeed eligible to seek a clarification and that none of the stipulated grounds for rejection apply. If the request is rejected, the FTA will notify the applicant and provide the reasons for rejection.

Conclusion

The UAE's tax clarification process, facilitated by the EmaraTax platform, is an invaluable tool for businesses and individuals seeking certainty in their tax affairs. By meticulously following the outlined steps – from crafting a detailed request with comprehensive supporting documentation to understanding the fee structure and submission timelines – you can effectively leverage this mechanism to resolve ambiguities and ensure robust compliance.

CDA’s professional Tax assistance 

Don't let tax uncertainties hinder your operations. Proactively utilize the FTA's Private-Clarifications-EN-18-11-2024.pdf to gain clarity and operate with confidence in the dynamic UAE tax landscape. For seamless navigation and expert guidance through this process, partner with a reputable audit firm in UAE like CDA. Visit CDA today to learn how our specialized tax and audit services can help you secure your tax position and achieve peace of mind.

Mitesh Maithia

Tax Manager

Mitesh is a Tax Professional with expertise in direct, indirect, and international taxation, including transfer pricing, since 2018. Passionate about making complex tax matters simple, he shares insights to help businesses stay compliant and forward-looking.