FTA Decision 4/2024 — Amending the FTA policy on clarifications and directives

Factual summary

Replaced the attached Policy on Issuing Clarifications and Directives from 1 July 2024. The restated policy sets who may request a private clarification, the minimum content, the grounds for refusal and the binding effect, the role of the Ministry of Finance for unclear legislation and tax-policy guides, and the procedures for administrative exceptions (valid 3 years) and alternative input tax apportionment methods. It also introduced advance pricing agreements under the Corporate Tax Law, with application dates to be announced in the fourth quarter of 2024.

What it means in practice Professional insight

Who: taxpayers that sought FTA clarifications or directives between 1 July 2024 and 28 February 2025. What to check: which policy version applied when a request was made, and the current version under FTA Decision No. 5 of 2021.

Key provisions

• Art. 1 The Authority issues clarifications and directives in accordance with the policy attached to the decision, as amended with the approval of the Board at its 32nd meeting on 26/4/2024.
• Section III.1 A private clarification request (by the taxpayer, its authorised signatory, tax agent, legal representative or a tax group's representative member) must concern federal taxes or related penalties, state whether one or more taxes are involved for the fee under Cabinet Decision No. 65 of 2020, relate to the applicant's own facts and contain the minimum information in Annex (A); the Authority may refuse, for example, where a guide or public clarification already answers it, the scenario is hypothetical, the matter is under audit, assessment or inspection, or tax avoidance or evasion is suspected.
• Section III.1 A private clarification binds the Authority administratively for the applicant only and on the same facts; it is open-ended unless a period is set, ceases if the underlying legislation is amended, may be withdrawn if incorrect, and a later clarification on the same subject prevails; requests for further information must be answered within 40 business days, and an unsubmitted draft is closed after 40 business days (reminder after 20 business days).
• Section III.2 The Authority sets the procedures for public clarifications, guides and e-learning programmes; public clarifications and guides related to tax policy are sent to the Ministry of Finance for its views before issue.
• Section IV.1 Administrative exceptions may be granted for tax invoices, tax credit notes, evidence of export and the export period (VAT) and evidence of export (Excise Tax); a granted exception is valid for 3 years from issue unless the underlying legislation is repealed or amended.
• Section IV.2 An alternative input tax apportionment method may be requested by a VAT registrant of at least 6 months making both taxable and non-taxable supplies where the standard method is not fair and reasonable; an approved method applies from the first tax period after the decision for two or four years, with recalculation limited to three tax years.
• Section IV.3 Advance pricing agreements may be requested under the Corporate Tax Law; the start date for applications and the procedures were to be announced in the fourth quarter of 2024. The decision is effective from 1 July 2024 (Art. 2).