Mohamed_El Baghdady

UAE Tax Dispute Resolved: Victory for Habib Al Mulla and Partners 

In a groundbreaking legal triumph, Habib Al Mulla and Partners‘ esteemed tax and financial crimes team secured a resounding success in a recent taxation dispute brought before the Federal Supreme Court of the United Arab Emirates (UAE). Representing the taxpayer, the team effectively challenged the Federal Tax Authority, resulting in a landmark decision that not only vindicates their client but also sets a crucial precedent in the UAE’s taxation jurisprudence. 

The dispute centered around a company, hereafter referred to as the taxpayer, engaged in logistics, customs clearance, shipping, and related activities. The crux of the matter involved excise goods stored in Jebel Ali Free Zone, intended for re-export outside the UAE. Despite the eventual exportation of all goods, the Federal Tax Authority asserted that the taxpayer stockpiled ‘excess’ excise goods at the inception of the Excise Tax law in 2017. 

The disagreement escalated, leading to the taxpayer’s submission of voluntary disclosures, resulting in additional payable Excise Tax and subsequent administrative penalties imposed by the Federal Tax Authority. Reconsideration requests and appeals unfolded, involving various adjudicating bodies, including the Tax Dispute Resolution Committee, the Abu Dhabi Federal Court of First Instance, and the Abu Dhabi Federal Court of Appeal. 

The Federal Supreme Court’s decision, delivered in October 2023, decisively favoured the taxpayer, rejecting the appeal by the Federal Tax Authority. Noteworthy principles emphasized in the judgement include the non-acknowledgment of the accuracy of voluntary disclosures as an admission by the taxpayer and the taxpayer’s non-liability for Excise Tax on exported goods that they did not own. 

The resolution of this tax dispute not only affirms the legal robustness of the taxpayer’s position but also establishes a milestone emphasizing the rule of law in UAE taxation matters.  

The success of this legal endeavor was spearheaded by Mohamed El Baghdady (pictured), Head of Tax and Financial Crimes, supported by the expertise of Ezzat Gharep and Mohammed Al Marzooqi