Federal Decree-Law by No

- Federal Law no. 11 of 1981 concerning the Imposition of a Federal Tax on Imports of Tobacco and its Derivatives and its amendments; - Civil Transactions Law promulgated by Federal Law no. 5 of 1985 and its amendments;

- Federal Decree-Law no. 5 of 2011 on the Regulation of the Boards of Directors, Boards of Trustees and Committees in the Federal Government;

In the application of the provisions of this Decree-Law, the following terms and expressions shall have the meanings assigned hereto, unless the context otherwise requires:

State: United Arab Emirates.

Federal Government: The Government of the State.

Emirates governments: local government in each emirate.

Ministry: Ministry of Finance.

Minister: Minister of Finance.

Authority: Federal Tax Authority.

Board: The Board of Directors of the Authority.

Chairman: The Chairman of the Board.

Director-General: The Director-General of the Authority.

Concerned Entities: The federal and local authorities concerned with combating tax evasion in the State.

Taxpayer: Each person who pays federal taxes.

Federal Taxes: The tax imposed under a federal law.

Tax Law: Any federal law under which a federal tax is imposed.

Associated Fines: Financial fines associated with the federal tax.

Tax Measures: Procedures of management, collection and implementation of federal taxes and associated fines.

Authority Costs: All constituent and operational expenses of the Authority.

Tax Evasion: The use by a person of illegal means for non-payment of tax payable or the use of illegal means to recover a tax that person is not entitled to recuperate or recover.

Double Taxation: The situation in which any tax is imposed more than once on the same taxpayer and the same income source.

Under the provisions of this Decree-Law, a federal public authority to be called the "Federal Tax Authority" with an independent legal personality and of a financial and administrative independence shall be established. The Federal Tax Authority shall enjoy the legal capacity necessary to act.

The headquarters of the Authority shall be located in the city of Abu Dhabi, and branches and offices thereof may be established within the State by a decision of the Authority.

The Authority shall assume the following duties:

1- Management, collection and implementation of federal taxes and associated fines, the distribution of their revenues, and the application of the tax measures in force in the State, and for this purpose, it shall do the following:

a - Application of laws and regulations with respect to federal taxes and associated fines.

b - Payment of the Authority's financial liabilities.

c - Application of agreements on the prevention of double taxation ratified by the State.

d - Avoidance of double taxation situations and combating fiscal evasion in cooperation with the relevant authorities within and outside the State.

e - Deciding on applications for registration in the tax systems in force in the State, and allocation of tax figures for registration in such systems.

f - Proposal of legislation on the management, collection and implementation of federal taxes and associated fines, and distribution of their revenues, in coordination with the Ministry.

g - Collection of statistical data and information related to federal taxes and associated fines.

h - Establishment and conservation of records for registered taxpayers as determined by the tax laws issued.

i - Issuance of guidance and clarifications deemed necessary for the taxpayer with respect to the limits of his federal tax and associated fines obligations, in accordance with the mechanisms established by a decision of the Board.

j - Coordination with the federal government, the governments of the UAE and the taxpayer on all issues related to federal taxes and associated fines.

k - Conclusion of contracts with some entities to perform some actions necessary for the Authority to exercise its powers.

l - Exchange of information and experiences with countries and tax-related international organizations, agencies and associations.

m - Coordination with the competent entities to become a member of the international organisations, entities, and unions related to taxes.

n - Representing the State at regional and international conferences and meetings whose activity relates to tax affairs in coordination with the competent authorities in the State.

o - Inspection of registers and documents related to the taxpayer.

p - Review tax declarations and reports submitted to the Authority and conduct audit thereof and approve or amend them or request any additional information or documents.

q - Issuance of federal tax-related certificates.

r - Application of a mechanism to settle disputes between the taxpayer and the Authority in accordance with the legislation in force.

s - Requesting access to any data or information available with any third-party having information about a person subject to tax audits, and which could be essential to the process of tax audit.

t - Requesting any person having transactions with a person subject to tax audit to provide it with information on such transactions.

2- Apply the rules and procedures on cooperation between the State, the countries, international and regional organisations, entities and unions concerning tax systems, and implement the requirements related to the exchange of information, as determined in the decisions issued by the Cabinet in this regard based on the recommendations of the Minister.

3- Any other competencies entrusted thereto by virtue of laws, regulations and decisions issued by the Cabinet.

The Board of Directors to be chaired by the Minister and formed with a sufficient number of members appointed by a Cabinet decision upon nomination by the Minister shall undertake the management of the Authority. Said decision shall determine the remuneration of the Board members and the Board's working system.

The Board shall be the highest authority overseeing and running the affairs of the Authority, and shall have the following functions:

1 - Draw up the general policy of the Authority and supervise its implementation, after the Cabinet approval thereof.

2 - Propose the general policy of the taxes in light of the State policy in coordination with the Ministry, and supervise its implementation, and the Council of Ministers shall issue the necessary relevant decisions.

3 - Oversee the Authority's exercise of its powers.

4 - Issue regulations and decisions necessary to organize the work in the Authority.

5 - Propose the organizational structure of the Authority, and obtain the Cabinet approval thereof.

6 - Propose the human resources regulation in the Authority, including the rules of appointment of staff and payroll, to be adopted by a Cabinet decision.

7 - Propose the financial regulations and purchases list in accordance with criteria of transparency and accountability, to be approved by a Cabinet decision.

8 - Approve the Authority’s annual draft budget and final account, and raise the same to the Council of Ministers for approval.

9 - Appoint one certified independent auditor or more for the accounts of the Authority, and determine their fees.

10 - Propose fees for services provided by the Authority and administrative fines to be imposed upon violation, and present the same to the Minister for a recommendation. Such fees and fines shall be determined by a Cabinet Decision.

11 - Appoint executive officers for the Authority's sectors.

12 - Raise an annual report to the Cabinet on the achievements and functioning of the Authority.

13 - Any other functions assigned to the Board under the tax laws or by the Council of Ministers. The Board shall form from among its members one committee or more to be entrusted with the study and examination of some of the issues that fall within its competences, and may invite whoever it deems appropriate to attend its meetings without having the right to vote.

The Authority shall have a general manager of the rank of Undersecretary of the Ministry, to be appointed by a federal decree upon the nomination of the President and the Board's approval.

1 - The Director-General shall exercise the powers granted to him by the Board and necessary for the management of the Authority and represent it in its relations with third parties and before the courts. The Director-General shall, in particular, do the following:

a- Follow up the technical, administrative and financial affairs of the Authority within the limits prescribed in the applicable legislation, the Authority’s regulations and the Board's decisions.

b- Implement the Authority’s decisions and public policy adopted by the Board.

c- Propose the Authority’s plans and strategies, raise the same to the Board for approval and follow up their implementation.

d- Prepare the annual budget and the final accounts of the Authority and raise the same to the Board for approval in accordance with clause (8) of Article (6) of this Decree-Law.

e- Recruit staff and make decisions regarding their affairs in accordance with the human resources regulations applicable in the Authority and within the limits of the powers granted to him by the Board.

f- Prepare periodic reports on the workflow of the Authority and raise the same to the Board.

g- Conclude contracts and agreements to which the Authority is a party in accordance with the powers conferred upon him by the Board and the regulations applicable in the Authority.

h- Any other functions or tasks assigned to him by the Board.

2 - The Director-General may delegate some of his powers provided for in clause (1) of this Article to the executive officers of the Authority.

1- The Authority shall have an annual independent budget.

2- The financial surpluses shall be used from the self-generated income of the Authority of any fiscal year to cover the Authority’s budget approved for the following fiscal years.

The Authority's funds shall be deemed public funds and shall be exempt from all taxes and fees.

The fiscal year of the Authority shall commence on the 1st of January and end on the 31st of December of each year; however, the first fiscal year of the Authority shall begin the date of entry into force of this Decree-Law and end on the 31st of December of the following year.

The financial resources of the Authority shall consist of the following:

1 - The revenues collected by the Authority for the services it renders with the exception of the revenues of federal taxes and associated fines.

2 - The amounts deducted from revenues of federal taxes and associated fines, which are allocated to pay the costs of the Authority under the budget approved in accordance with clause (8) of Article (6) of this Decree-Law.

3 - Loans obtained by the Authority from the federal government to pay the Authority's costs by virtue of a Cabinet decision upon the recommendation of the Minister. The Authority shall reimburse those loans during the period specified by the Cabinet decision, and in accordance with the provisions of Article (16) of this Decree-Law.

4 - Grants, subsidies, donations and wills which are accepted by the Board and which comply with the competencies of the Authority.

5- Bank deposits’ returns through the management of federal tax revenues and associated fines collected during the fiscal year.

Revenues of federal tax and associated fines collected by the Authority shall be deposited in separate accounts for each type of federal tax, pending distribution to the federal government and the governments of the UAE in accordance with the legislation issued in this regard.

The Authority shall, based on a Cabinet decision, reserve amounts of the revenues of federal taxes and associated fines for the purposes of recovery.

Amounts detained shall be deposited in a separate account for each type of federal tax, and the recovery mechanism of those amounts shall be determined in accordance with tax laws.

1 - Every tax law shall determine whether or not the revenues of federal taxes and associated fines resulting from this law are subject to sharing between the federal government and the governments of the UAE.

2 - The mechanism of sharing federal taxes and associated fines and the schedules of their distribution shall be determined by a Cabinet decision, upon the recommendation of the Minister and in agreement between the federal government and the governments of the UAE.

Before any sharing or distribution of the revenues of federal tax and associated fines levied by the Authority, the following actions shall be taken:

1 - Deduction of the amounts reserved for the purposes of recovery, in accordance with Article (14) of this Decree-Law.

2 - Deduction of the amounts specified in clause (2) of Article (12) of this Decree-Law.

3 - Repayment of the amounts that have been obtained, in accordance with clause (3) of Article (12) of this Decree-Law.

4 - Reimbursement of the expenses paid by the federal government to establish the Authority before the issuance of this Decree-Law.

Without prejudice to Articles (13), (14), (15) and (16) of this Decree-Law, the Authority shall distribute the revenues of federal taxes and associated fines to the federal government and the governments of the UAE, as determined in a decision to be issued by the Cabinet.

A certified independent auditor or more shall undertake the audit of the Authority's accounts, according to accounting principles generally accepted in the state. The auditor shall submit a report to the Board within maximum three months as of the end of the fiscal year, provided that the final account is raised to the Council of Ministers according to the applicable rules and legal provisions. The auditor may not combine his work and any other work in the Authority.

Until the issuance of a human resources regulation in the Authority, the provisions of the human resources regulation in the independent federal entities shall apply to the staff of the Authority.

1- With exception to the provisions of Paragraph 1 of Article (62) of Federal Law no. (23) of 1991 on the regulation of the legal profession, the Authority shall represent itself before the federal and local judicial authorities and before the committees of settlement of tax disputes and before the entities of arbitration in the State or before any other entity or committee having judicial competencies whether such entity is the plaintiff or the defendant. For this purpose, it may submit applications and statements of claims and memorandums of appeal and raise defence, and in general it may carry out whatever is required for the initiation of the lawsuit and appeals before such entities.

2- The Authority may delegate the competent department at the Ministry of Justice or any consultants or legal experts among those working thereat, provided that they are registered in the table of non-working lawyers, and it may also hire lawyers, to carry out the acts mentioned in Clause (1) of this Article. Such lawyer shall be among those accepted for litigation before the judicial entity where the procedures are initiated.