Challenging Tax Penalties in the UAE

Objecting to tax penalties in the UAE goes through three stages in a fixed order: a reconsideration request to the Federal Tax Authority, then an objection before the Tax Disputes Resolution Committee, then an appeal before the competent Federal Court. Each stage has a deadline counted in business days, and anyone who misses it loses the right to the next stage, however strong the grounds.

The problem is that many business owners treat a tax penalty like a service request: an online form and a few attachments. In reality, what you write in the first request is what you will be held to before the Committee and the court later, and the figures circulating online about the objection period contradict one another, some of them taken from a law that has been repealed.

This article explains the path for objecting to tax penalties, where the right is lost, the difference between an objection and a penalty waiver request, when a penalty turns into tax evasion, and where the tax agent's role ends and the tax lawyer's begins.

What does objecting to tax penalties in the UAE mean?

An administrative penalty is an amount imposed by the Federal Tax Authority on anyone who breaches the Tax Procedures Law or the laws on VAT, corporate tax and excise tax: late registration, late filing or payment, an incorrect return, or failure to keep records. It is issued in an "administrative penalties assessment" notified to the person concerned.

From the moment of notification the penalty becomes a debt due to the Authority that can be collected, and the deadlines start to run. Under the Federal Decree-Law on Tax Procedures, an administrative penalty may not exceed twice the amount of the tax for which the assessment was issued, and this is among the first things a lawyer checks in the penalty decision.

The reconsideration request to the Federal Tax Authority

The first step is the reconsideration request. It is submitted to the Authority itself through the EmaraTax portal, with reasons, within 40 business days from the date of notification of the decision. The Authority decides on it by a reasoned decision within 40 business days of receiving it, may extend that period where necessary, and then notifies the applicant within 5 business days of issuing its decision.

If the penalty is linked to a tax assessment, there is another route, the tax assessment review request, with the same time limit, and the two requests cannot be pursued together for the same assessment. Choosing the right route is a legal question, not a procedural one.

The danger of this stage is that it looks easy. Whoever writes "we request a waiver due to the company's circumstances" in the reasons field has filed a plea, not an objection, and has wasted the chance to build a defence: Did the violation actually occur? Was the decision properly notified? Was the penalty calculated under the schedule in force at the time of the violation? Did it exceed its cap? What is left out here is hard to make up for before the Committee and the court.

At this stage the firm studies the penalty decision and its documents and drafts the grounds of the request in legal terms. The request is then submitted from the account of the person concerned or their tax agent.

Missed the deadline to object? An extension is not guaranteed

The law allows a request to extend the period for filing a reconsideration request, but only in specific cases that must be proven with documents, such as serious illness or death of the authorised signatory, destruction of records in a disaster, a general failure of the Authority's systems, or force majeure.

On the other hand, the Federal Tax Authority's decision lists cases in which an extension is refused, and they are the very excuses people assume will be accepted: not knowing one's obligations, the owner being busy running the business, the complexity of the matter, and the fault of a third party the taxpayer relied on, such as the tax agent or the legal representative.

The objection before the Tax Disputes Resolution Committee

If the Authority rejects the reconsideration request, or does not issue its decision within the time limit, the dispute moves to the Tax Disputes Resolution Committee, which is chaired by a member of the judiciary. The objection is filed through the Ministry of Justice's tax objection system within 40 business days from notification of the Authority's decision.

The Committee will not accept the objection in three cases: if no reconsideration request was first submitted to the Authority, if the full tax related to the objection has not been paid, or if it is filed out of time. The Committee decides within 20 business days of receiving the objection and may extend that period.

Here is a point many overlook: if the total tax and penalties under objection do not exceed AED 100,000, the Committee's decision is final and cannot be appealed to the court. In these disputes the Committee is the last chance, and the objection memorandum is your only memorandum.

The firm represents the objector before the Committee: it prepares the objection memorandum, attaches the supporting documents, and replies to the Authority's response.

Appealing the Committee's decision before the Federal Court

In disputes above AED 100,000, the person concerned, and the Authority too, may appeal the Committee's decision before the competent Federal Court within 40 business days of being notified of it. If it is not appealed in time, it becomes an enforceable instrument executed through the execution judge.

The court will rule the appeal inadmissible if the appellant does not provide proof of payment of the full tax and proof of payment of at least 50% of the administrative penalties, in cash or by an approved bank guarantee in favour of the Authority, or if no objection was first made before the Committee. An appeal therefore needs financial and documentary preparation before the case is registered, not after.

This stage is full litigation, from the statement of appeal to memoranda, expert evidence and pleading, and it is the work of a licensed advocate, not a tax agent. The firm pleads tax appeals before the Federal Courts.

Objection, penalty waiver or instalments?

Many people confuse an objection with a waiver request. An objection says the penalty is legally wrong. A waiver or instalment request accepts the penalty and asks for it to be dropped, or its payment eased, because of an excuse, and it is examined by a special committee at the Authority.

Under the Cabinet Decision on the controls for instalment, waiver and refund of administrative penalties, a waiver requires that the violation is not linked to a tax evasion crime and that the request rests on one of the listed excuses, such as the death or illness of the owner or of a key employee, restrictions imposed by the authorities, or a failure in the Authority's systems, together with an undertaking to correct the violation and not repeat it. Instalments require that the unpaid penalties are not less than AED 50,000 and that they are not in dispute before the Tax Disputes Resolution Committee or the courts.

The committee's decision on a waiver request is final, no reply within the time limit counts as a refusal, and no more than one request may be filed for the same penalty while it is under review. Choosing the wrong route, or filing the two routes in the wrong order, can close one of them. Identifying the right route for your case is where the firm starts before any step is taken.

When does a tax penalty turn into a tax evasion case?

An administrative penalty is not always the end of the matter. Deliberately failing to pay tax due, deliberately giving the Authority incorrect data and documents, or concealing or destroying records are acts criminalised by the Tax Procedures Law. The penalty for tax evasion in the UAE is imprisonment and a fine of not less than the amount of tax evaded and not more than three times that amount, or either of the two.

More serious still, deliberately failing to pay the administrative penalty itself is a separate crime, unless a decision waiving it has been issued. Ignoring the penalty is not an option.

Criminal proceedings may only be initiated on a written request from the Director General of the Authority. The law allows a settlement, and its cost rises the later it comes: before proceedings are initiated, by paying the tax and penalties; after they are initiated, with an additional amount equal to 50% of the tax evaded; and after a conviction, 75%. Once the file reaches this point it is a criminal matter, and the firm handles it by defending before the Public Prosecution and the court and by pursuing a settlement.

Tax lawyer in Dubai and the tax agent: who does what?

A tax agent registered with the Authority represents the client before it in registration, returns and correspondence, and can submit the reconsideration request on the client's behalf. The lawyer handles what comes after and around it: building the legal grounds of the request, representation before the Tax Disputes Resolution Committee, the appeal before the court, and the defence in tax evasion cases.

That is why the firm works with the client's tax agent, not in place of the agent: the agent provides the figures and records, and the lawyer turns them into legal arguments. The earlier the lawyer comes in, at the reconsideration request and not at the court, the stronger the file.

Deadlines for objecting to tax penalties, in numbers

Periods are counted in business days, the day of notification is not included, and if the last day falls on a holiday the period runs to the first business day after it.

What to prepare before contacting a tax lawyer

Do not submit any new request through the portal before it has been legally reviewed. A hasty request may count against you.

Legal references

• Federal Decree-Law No. (28) of 2022 on Tax Procedures, as amended.

• Cabinet Decision No. (74) of 2023 on the Executive Regulation of the Federal Decree-Law on Tax Procedures, as amended.

• Cabinet Decision No. (105) of 2021 on the Controls and Procedures for Instalment, Waiver and Refund of Administrative Penalties.

• Cabinet Decision No. (40) of 2017 on Administrative Penalties for Violation of Tax Laws in the UAE, as amended.

• Federal Tax Authority Decision No. (1) of 2025 on the cases for extending the period for accepting a tax assessment review request or a reconsideration request.

Frequently asked questions about objecting to tax penalties in the UAE