Key consideration:

The taxpayer (or an authorized signatory, tax agent, or legal representative) may submit a request for Private Clarification via the FTA’s online portal, where following conditions are met:

1. Request relates to Federal Taxes or relevant Penalties.
2. A selection is required to be made where request pertains to one or more taxes, so as to determine the fee.
3. Clarification should relate only to the taxpayer or taxpayers submitting the request.
4. Request contains all necessary information for FTA to determine the response.

The decision also states that FTA may reject a request if: 

1. The answer is already covered in public clarification / guidance, 
2. The request involves hypothetical scenarios, 
3. The request relates to a previously issued clarification or matter is decided by FTA during assessment.
4. The matter is under tax audit, assessment, or inspection. 
5. it considers it not in conformity with the principles of taxation and a violation of the anti-abuse principles.

Where request includes matters not clear in tax legislation, the Ministry of Finance (MoF) is consulted for clarification. Confidentiality is maintained by FTA regarding the identity of applicant while consulting MoF.

For requests linked to OECD BEPS Action Five, the Authority sends a bi-monthly summary of clarifications to the MoF, including taxable person data under international agreements as per FTA Decision No. 4 of 2024.

Timelines and procedural mechanisms:

• Submission: Request to be filed online. Draft requests initiated by taxpayers are to be submitted within 40 business days from the starting of the application.
• FTA review: Based on initial assessment, FTA may require taxpayer to provide further details within 40 business days otherwise application may be closed in the system. 
• Decision issuance: FTA shall determine and specify the timeline for issuance of Private Clarification, which may be extended if further data is required. 
• Binding nature: Applies only to the requesting taxpayer or tax group (shall not apply to third parties) and remains valid unless repealed, overridden or superseded due to any amendment in law or any public clarification or guide issued subsequently by the FTA on subject matter, or where FTA provides an expiry date. 

Information requirements:

• Business name, TRN, and contact details. 
• Detailed description of the tax issue.
• Name and information of the authorized signatory. 
• Supporting documents (contracts, invoices, agreements). 
• Legal provisions reference. 
• Estimated tax impact.

Impact on taxpayers:

Processes only fully substantiated requests, enhancing response efficiency while reducing frivolous applications.

Misuse of the private clarification process is reduced, with genuine technical uncertainties being the focus.

Taxpayers can request binding clarifications from the FTA on specific transfer pricing issues. The requests must be transaction-specific and not be hypothetical.

Key consideration:

The decision states that FTA must consult the MoF before issuing public clarifications & guides to facilitate consistency with prescribed tax policies.

Timelines and procedural mechanisms:

• Issued to provide its views or observations in terms of consistency with prescribed tax policies.
• Consultation requirement: The FTA must seek MoF review before finalizing public guidance.

Information requirements: 

Not required from the taxpayer.
 

Impact on taxpayers: 

Reducing discrepancies or misinterpretations to align with the prescribed tax policies.

Key consideration: 

• A taxable person in the UAE is eligible to apply for the special input tax apportionment method subject to meeting the prescribed conditions. FTA had clarified the conditions and application process in the Value Added Tax (VAT) Input Tax Apportionment Guide (VATIG1).
• Further, according to the recent amendment in the UAE VAT Executive Regulations, with effect from 15 November 2024, taxable persons were allowed to use a specified recovery percentage to apportion the input tax incurred to make both taxable and exempt supplies, provided the prescribed conditions are met. 
• Under this decision, the FTA has formalized the mechanism, framework, and process under which the applications for the above approvals can be made.

Timelines and procedural mechanisms: 

• Submission: The request must be submitted by the authorized signatory of the taxable person (in case of a VAT group the representative member of the tax group), or appointed tax agent, or legal representative appointed by the court.
• FTA review and decision issuance:  FTA has the right to specify different time periods for issuing the decision according to the category of the application. As such, the FTA may decide on the timelines upon receiving the application. When the FTA requests additional information the taxable person should submit such information within 40 business days.
• Binding nature: 
  • Approval to use the special input tax apportionment method will be valid for two years or four years depending upon the method (i.e., sectoral, or non-sectoral) 
  • Approval to use the specified recovery percentage will be valid for four years

Information requirements:

Application for input tax special apportionment method: Information prescribed in the application form which includes detailed description of the business activities, reasons for applying for a special input tax apportionment method, historically calculated input VAT under the standard and special input tax apportionment methods.
Application for specified recovery percentage: To be provided by the authority.   

Impact on taxpayers:

Ease in VAT compliance for taxable persons making both taxable and exempt supplies.

Key consideration:

• Based on the Corporate Tax Law, a person may make an application to the FTA in relation to the conclusion of an APA with respect to a transaction or an arrangement proposed or entered by the person.  
• An APA provides ex-ante certainty on transfer pricing methodology applied to intercompany transactions, reducing the risk of disputes. Additionally, APAs reduce the risk of double taxation if we consider bilateral/multilateral APAs.
• Applications for unilateral advance pricing agreements shall be received from the 4th quarter of 2025. The date of receiving any other advance pricing agreement applications shall be announced after that date.
• The availability for other advance pricing agreements (e.g., bilateral, or multilateral APAs) will be determined at a later date.

Timelines and procedural mechanisms: 

To be provided by FTA in due course.

Information requirements: 

To be provided by FTA.

Impact on taxpayers: 

• The agreement must adhere to the arm’s length principle as defined under the Corporate Tax Law.
• Expectation that once an APA is in place, it may be valid for a fixed period (typically 3-5 years), with the possibility of renewal if there are no material changes with respect to the covered transactions and economic conditions remain stable.