Under “private clarification”, companies can submit a request to seek further clarification related to one tax, or more than one tax issued by the Federal Tax Authority (FTA). The companies had to pay for this service starting June 1, 2023.
Recently, FTA also announced that the fees paid for “private clarification” of tax would be refunded in some cases when the clarification was not issued. The fee refund went into effect on August 1.
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What is a private clarification on tax and how can an individual or company apply for one? To know more about eligibility, documents required, and the process of submission, read on.
What is a private clarification?
Federal taxes that apply in the UAE include:
- Value added Tax (VAT)
- Excise Tax
- Corporate and Business Tax
To help taxpayers understand their obligations and ensure compliance with the tax laws, the FTA issues guides and public clarifications. In addition, the FTA will also issue private clarifications to specific queries of individual taxpayers.
A private clarification is a document that will be issued, in response to the applicant’s query about the tax treatment of specific transactions, by the FTA. The clarification will “provide guidance on the FTA’s understanding of the tax legislation and its proper application to the facts” stated in the applicant’s request.
Who is eligible to apply?
You can apply if you are an individual or company who has:
- Analysed the relevant tax law, regulations and guidance and still finds that the answer is uncertain. Applicants must monitor all publications issued by the FTA including but not limited to the law, regulations, and guidance to avoid unnecessary and invalid submissions of a clarification application
- An interest in the matter at hand (i.e. this is a genuine factual matter that has a material impact on your activities); the matter is not covered by previous clarifications issued by the FTA.
With regards to private clarification requests for Corporate Tax, the clarification request must only relate to Corporate Tax registration. Any clarification question not related to Corporate Tax registration will not be addressed by the FTA.
If you already registered with the FTA, the clarification form must be submitted by the authorised signatory from the registered email address. For non-registrants, the person submitting the request must provide valid proof of authorisation to submit the request.
Generally, the person (or the authorised signatory) seeking a clarification in relation to its business should submit the form. However, submissions will also be accepted from:
- Appointed tax agents
- Appointed legal representatives
- Authorised signatory of representative member of tax group (if applicant is part of one)
It is important to note that tax advisors (who are not registered tax agents) are not permitted to submit any requests on behalf of another person.
Required documents
- Documentary proof supporting factual and legal grounds on which your request is based. This could include sample invoices, contracts, payment slips, or other relevant documents
- Formal letter including details of the facts, legal references, technical view, any alternative tax treatment which you consider may apply as well as question(s) for the FTA to clarify
- Tax advice received (if any) in respect of the matter for which you are seeking clarification
- Cover letter – description of clarification requested
If the clarification is required for multiple tax types, documentation related to all tax types in the request must be provided
Accepted file types are Excel, PDF, JPG, PNG and JPEG, and the individual file size limit is 5 MB.
Submitting the application
The applicant can submit the ‘private clarification’ form through the FTA mobile app or the EmaraTax platform. When applying, these are the relevant fields to fill, and information to submit:
Select relevant tax account
Those registered with the FTA must select the relevant TRN, and if the clarification is for more than one tax type, the other types can be selected at a later stage in the application.
Name of applicant
If the request is for a company, the name of the company should be filled, not the name of the person submitting the application. If the request is from a tax group, then the name of the representative member must be entered.
Tax Agent Approval Number
If applicable, enter the TAAN. It is important to note that the tax agent may submit a clarification request only for the particular tax type that they are authorised to assist with.
Clarification request information
After submitting the applicant’s contact details, information about the request must be entered.
First, select the relevant type of tax.
Make sure to check any previous clarifications received and avoid submitting duplicate or similar requests. If submitting enquiry relevant to a previous request, list all clarifications received from the FTA and enter the reference number.
Then, mention the estimated impacted tax amount (enter 0 if unsure), nature of tax (input tax, output tax, payable tax etc.), and tax period.
Select the status of the transaction: proposed, current, or completed
Documents and proof
Provide supporting documents, a cover letter, and a brief background with all relevant facts (note: this is separate from the cover letter).
Specify legal provisions (including legislation name and article numbers), relevant material reviewed (guides, e-learning etc), any relevant tax advice. You also need to describe the tax treatment you consider to be correct, and the other tax treatments you do not consider correct, and provide a description of both these analyses.
Provide the questions addressed to the FTA (separate from formal letter), limiting them to under 5 questions if possible, and upload a formal letter seeking clarification.
Review the details, confirm that all documents and information are accurate, and submit.
Fees
- Single tax clarification – Dh1,500
- Multiple tax clarification – Dh2,250
The multiple tax clarification must be related to the same transaction and parties. If the clarifications are related to different transactions, then separate applications must be submitted.
The fees can only be paid via the Emaratax portal using a valid card.
The FTA may take 50 business days to respond from the time that the application is received.