FDL 13/2016 — Establishment of the Federal Tax Authority

Factual summary

Establishes the Federal Tax Authority as an independent federal authority based in Abu Dhabi and sets its jurisdiction: administering, collecting and enforcing federal taxes and related penalties, registering taxpayers, auditing returns, issuing clarifications and directives, settling disputes and exchanging information. It sets up the Board chaired by the Minister of Finance and the Director-General, and governs the Authority's budget, resources and the deposit, withholding and distribution of federal tax revenues.

What it means in practice Professional insight

Who: taxpayers, tax agents and advisers who rely on FTA powers and guidance. What to check: the legal basis of an FTA action or clarification (Art. 4), the Board's role in proposing service fees (Art. 6(10)), and the FTA's standing before courts and committees (Art. 19 (bis)).

Key provisions

• Arts. 2–3 The Federal Tax Authority is established as a general federal authority with independent legal personality, the legal capacity to act and financial and administrative independence; its head office is in Abu Dhabi and the Board may establish branches and offices inside the State.
• Art. 4(1) As amended by Federal Decree-Law No. 11 of 2020, the Authority administers, collects and enforces Federal Taxes and Relevant Penalties, distributes their revenues and implements the Tax Procedures; for this it decides on tax registration applications and allocates tax registration numbers, issues directives and clarifications to Taxpayers under mechanisms decided by the Board, inspects Taxpayers' records, reviews and audits tax returns, issues certificates, implements a mechanism to settle disputes with Taxpayers, and may demand information from third parties on a person subject to a tax audit.
• Art. 4(2)–(3) The Authority also implements the rules and procedures for tax cooperation with other states and international organisations and the requirements on exchange of information, as determined by Cabinet decisions on the Minister's recommendation, and any other jurisdiction vested in it by law or Cabinet decision.
• Arts. 5–6 The Authority is managed by a Board of Directors chaired by the Minister of Finance; the Board sets the Authority's general policy, proposes general tax policies, issues the regulations and decisions organising the Authority's work, and proposes the fees for the Authority's services and the related administrative penalties, on which the Cabinet issues a decision (Art. 6(10)).
• Arts. 9, 12 As amended by Federal Decree-Law No. 11 of 2020, the Authority has an independent annual budget and carries forward surpluses of its own revenues; its resources include revenues from its services (excluding Federal Taxes and Relevant Penalties), amounts withheld from tax revenues for its approved budget, loans from the Federal Government, gifts and grants, and the proceeds of bank deposits from managing tax revenues (clause added in 2020).
• Arts. 13–17 Revenues of Federal Taxes and Relevant Penalties are deposited in a separate account for each tax; the Authority may, by a Board decision, withhold amounts for refunds; each Tax Law determines whether its revenues are shared between the Federal Government and the Emirates' Governments, and refund withholdings, budget allocations and loans are settled before revenues are distributed under a Cabinet decision.
• Art. 19 (bis) Added by Federal Decree-Law No. 11 of 2020: as an exception to the Legal Profession Law, the Authority represents itself before federal and local judicial authorities, tax dispute resolution committees and arbitration bodies, through the competent department of the Ministry of Justice, its own legal advisors listed in the register of non-practising lawyers, or authorised lawyers admitted before the court concerned.