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Khairallah Advocates & Legal Consultants obtained landmark judgment against Federal Tax Authority (FTA), revoked decision issued by the Committee of Resolution of Tax Disputes in the Emirate of Dubai imposing penalties imposed as per clause (9) and (11) of Table (1) of the Cabinet Decision No. (40) of 2017.

Success story in UAE taxation cases

We firmly objected to above because of misapplication of the law, being defective in reasoning and lacking the proper substantiation; decision has violated Article 25(i) of the Law of Tax Procedures because the penalty is applied in case of not paying the due tax within the prescribed time limit calculated after the expiry of the tax period plus the next time limit granted by the Law to the Taxable person.

The attorney of the Defendant challenged proceedings by relying on Article 32 and Article 33 of the Federal Law No. 7 of 2017 concerning the Tax Procedures.

In terms of subject matter:

It is established that the trial Court has the authority to understand the material facts of the case, estimate and weigh between the proofs submitted therein, provided that the Court ends with a reasonable judgment that is supported by the case documents.

It is established by the case documents that the FTA has not provided any evidence on notifying our Client and FTA’s non-acceptance of the requests for re-consideration is baseless; as Article 11 of the Law of Tax Procedures has explained the methods of notification by sending the notice to the through the address stated in the correspondence between FTA and that Person, bearing in mind that the FTA is responsible for the notification and nothing in the case documents proves that the FTA has fulfilled such responsibility, and the plea raised by the FTA that the penalty was imposed electronically on 07/10/2019 via FTA’s system does not meet the requirements of notification.

As for the substantive pleas:

The FTA alleges the necessity for applying the penalty for the delay in paying the tax differences under the voluntary disclosure, which is considered an amendment of the tax return submitted by our Client, but the Legislator had made the imposition of this penalty under Article 11 of the said decision no, (40) conditional on the presumption that the mistake contained under the tax return or the tax assessment results in non-payment of the tax itself by the taxable person due to such mistake, but for which there would be no penalty, and after the application of the penalty provisions imposed on administrative violations under the Cabinet Decision No. (4) of 2017 which apply to certain incidents separately, in which case the Legislator has prescribed a separate provision for each violation, on contrary to the interrelated incidents as is the case in the current incident.

Therefore, there is no reason for applying both of the administrative penalties contained under clauses (9) and (11) to the same violation prescribed under clause (11) of the Decision No. (40). Court revoked decision issued by the Committee of Resolution of Tax Disputes in the Emirate of Dubai imposing penalties.