Tax Litigation in the UAE

Tax Litigation in the UAE: Guide to Dispute Resolution Options for Taxpayers

Litigation Is a Process, Not a Crisis

As UAE’s tax regime matures, businesses are increasingly facing complex tax assessments, VAT refund rejections, administrative penalties, and audit adjustments issued by the Federal Tax Authority (FTA). Many taxpayers find themselves unsure of how to respond, whether to pay or appeal, and what the formal legal channels look like.

What makes UAE unique is that there’s a structured multi-tiered dispute resolution system, beginning with administrative review and extending all the way to federal courts. Whether you are disputing a penalty, refund rejection, or a tax assessment, understanding this framework is essential to protect your rights and avoid irreversible consequences.

The process begins with filing a Reconsideration Request to the FTA and may escalate to the Tax Dispute Resolution Committee (TDRC) and eventually to the Federal Primary Court, Court of Appeal, and Court of Cassation, depending on the amount and complexity involved.

Step 1: Start with a Reconsideration Request to the FTA

The first and mandatory step in any tax dispute is to file a Reconsideration Request directly with the FTA. This must be submitted within 40 business days from the date of the original decision (e.g., a tax assessment, penalty notice, or refund rejection).

The reconsideration application must be submitted online, and supported by contracts, invoices, customs documents, and legal reasoning. The FTA generally responds within 40 business days. Many disputes can be resolved at this stage, especially if backed by well-prepared documentation and explanation.

Importantly, no further legal action can be taken unless a Reconsideration Request is submitted and decided.

Step 2: Object to the Tax Dispute Resolution Committee (TDRC)

If the taxpayer is unsatisfied with the FTA’s decision on reconsideration, the case can be escalated to the Tax Dispute Resolution Committee (TDRC) — an independent body set up under the Ministry of Justice.

The objection must be submitted within 40 business days of the FTA’s decision and only after the full disputed tax are paid. TDRC is a quasi-judicial body with three regional committees:

Dubai TDRC – For Dubai-based businesses
Abu Dhabi TDRC – For Abu Dhabi entities and non-residents
Sharjah TDRC – For all other Emirates

Submissions must include an Arabic objection form, detailed memorandum, and documentary evidence. If the total disputed amount is less than or equal to AED 100,000, the TDRC’s decision is final. For higher-value cases, parties can escalate the matter further to court.

Step 3: Appeal Before the Federal Courts

Disputes involving AED 100,000 or more in tax and penalties can be appealed to the Federal Primary Court, provided the TDRC process has already been exhausted. Appeals must be filed within 40 business days of the TDRC decision.

Litigation before the courts requires formal legal representation and submission of Arabic-translated documents. If the taxpayer loses, the FTA may enforce recovery actions, and the taxpayer may also face legal costs.

The litigation journey may then continue to the Federal Court of Appeal, and finally to the Federal Court of Cassation, but only on matters involving legal errors or misapplication of the tax law. These higher-level courts deal less with facts and more with legal principles and precedent.

Other Strategic Remedies: Voluntary Disclosure and Penalty Reconsideration

In some cases, rather than waiting for an audit or raising a dispute, taxpayers may opt to voluntarily correct errors in their VAT or excise Tax returns. The Voluntary Disclosure mechanism allows correction of past mistakes — especially useful for incorrect input VAT recovery or underreported revenue. Timely disclosure can significantly reduce penalties especially if filed before an audit is initiated.

Additionally, taxpayers can also apply for Penalty Reconsideration under humanitarian or technical circumstances — such as serious illness, portal outages, or unforeseen business disruption. These require strong supporting evidence and often benefit from assistance by an FTA-approved tax agent.

Final Thoughts: Litigation Is a Process, Not a Crisis

Many UAE businesses fear tax disputes, often assuming that once an FTA decision is issued, it is final and irreversible. That is not the case. The UAE tax system provides a clear and structured litigation pathway — from administrative resolution to full judicial review.

However, navigating this path requires:

A deep understanding of deadlines and procedures
Strong documentation and legal arguments
Full compliance with filing and payment conditions
Expert support from tax agents and legal counsel

How Stratify Can Help You Defend and Win

At Stratify Consulting Group, we specialize in end-to-end tax litigation support — helping clients file reconsideration requests, prepare TDRC objections, evaluate voluntary disclosures, and coordinate with legal teams for court appeals.

With 15+ years of experience, FTA-approved tax agents, and deep sectoral insight, we offer: