As of 13 November 2024, the FTA (Federal Tax Authority) released Tax Procedures Public Clarification, introducing a new mechanism for tax assessment reviews. The new mechanism allows taxpayers to dispute tax assessments and the relevant penalties before they submit reconsideration requests. The public clarification provides different scenarios for requesting a tax assessment review.

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Here is an analysis of the tax procedures public clarification on tax assessment review;

Purpose of Tax Assessment Review

The FTA has introduced the phenomenon of tax assessment reviews for the purpose of allowing taxpayers to dispute tax assessments if they suspect any errors in the FTA assessment. The taxpayers can request independent FTA officials to review the tax assessment and the penalties imposed as a result. This review will be based on the evidence and facts presented by the taxpayer, along with the FTA audits. If a taxpayer suspects that the tax legislation or tax treaty that was applied was not correct or audit procedures were not correct to determine the imposed penalty or tax difference, FTA now allows to challenge the tax assessment. Note that the taxpayer cannot introduce any new data or information during this process if they missed it previously. There are different mechanisms for giving missed information later on.

Tax Assessment Review Request

• A taxpayer can request independent FTA officials to conduct a review of tax assessment and relevant penalties for which the taxpayer is sure that the FTA did not use the correct procedures.
• The taxpayer should be sure that the documents and information they provided during the tax audit were complete and accurate. Documents provided outside of tax audit periods will not be acknowledged.
• If a taxpayer has already submitted a reconsideration application, he/she cannot request a tax assessment review.
• A taxpayer can submit a request for tax assessment review within 40 business days after the assessment. If he/she is unable to submit the request within 40 days, the taxpayer can also request the FTA to extend the deadline.

Cases that Allow Tax Assessment Review

• If the taxpayer didn’t receive any notification before the tax audit and receives a tax assessment from the FTA, he/she can request a tax assessment review.
• If the taxpayer believes that the confirmations that FTA received from the external parties for the determination of taxable supplies value were not certified, he/she can request a tax assessment review.
• If the taxpayer believes that the tax assessment, he/she received is because the FTA didn’t ask to submit additional supporting documents that were important for the tax audit, he/she can request a tax assessment review.
• If the taxpayer believes that the value of some supplies was incorrectly determined, he/she can apply for tax assessment review.
• If the taxpayer believes that the excess inventory calculated by FTA for the purpose of excise tax was faulty, he/she can apply for tax assessment review.
• If the taxpayer suspects that the tax assessment was incorrectly estimated, he/she can apply for tax assessment review.
• If the taxpayer suspects that accounting miscalculations occurred during the calculation of the due tax, a review can be requested.
• If the taxpayer suspects that some documents submitted during the audit were disregarded or that a transaction was mistreated in tax, a review can be requested.
• If the assessment was issued for tax periods which were not mentioned in the notification of tax audit, the taxpayer can dispute such a tax assessment.
• If the FTA does not send the results of a tax audit to the taxpayer’s registered address, the taxpayer can dispute the tax assessment.

FTA’s Response to a Request

• The FTA must respond to a request for tax assessment review within 40 business days. If more time is needed, the FTA must notify the applicant.
• The FTA can reject the application if the requirements are not properly met.
• The FTA can adjust or amend the tax assessment issued previously.
• The FTA can uphold the tax assessment issued previously.
• The FTA has to notify the applicant once the decision is issued within 5 business days.

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