UAE Federal Supreme Court rules in favour of Dubai firm in one of the biggest tax cases

The UAE’s Federal Supreme Court has dismissed an appeal filed by the Federal Tax Authority (FTA) against taxes and administrative fines and penalties imposed by the authority against a Dubai-based beverage distributor, in connection with excise taxes.

Baker McKenzie Habib Al Mulla, which represented the company, said the court also ordered that the FTA repay the full amount of the penalties to the company.

This is believed to be the first time the Federal Supreme Court issued a judgment in favour of a taxpayer and removed all taxes and administrative penalties levied by the FTA, said Baker McKenzie Habib Al Mulla in a statement.

However, it didn’t disclose the name of the company.

The beverages company had earlier also successfully appealed before the Court of Appeal and Court of First Instance. Both the Court of First Instance and Court of Appeal had rejected the FTA’s appeal against the previous decision of the Tax Dispute Resolution Committee (TDRC), and allowed the company’s counter appeal against the decision of the TDRC (in doing so, both Courts held that no penalties should be due).

The Federal Supreme Court said administrative penalties were wrongly imposed, because the tax regulatory authority imposed them on the incorrect premise that the company had collected funds as tax, and had not reported or voluntarily declared such tax. The Court declared that the FTA’s argument was invalid.

“These judgments confirm the robustness of the UAE judiciary with respect to the adjudication of tax matters,” said Baker McKenzie Habib Al Mulla on its website.