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Beyond the Verdict: Understanding Why Not All Judgments Set Tax Disputes Precedents in the UAE

August 29, 2023

In the intricate tapestry of the UAE’s legal framework, the conclusiveness of judgments—especially those concerning tax—plays an indispensable role. A profound comprehension of this realm, particularly as it pertains to federal courts, is fundamental for both practitioners and the general public. This article seeks to elucidate the pivotal aspects of court precedents, emphasizing the exclusive jurisdiction of Abu Dhabi’s Federal Courts in handling tax appeals referred by the Tax Dispute Resolution Committees from all emirates.

1. “Res Judicata” in UAE Law: A Cornerstone

Central to our discourse is the principle of “Res Judicata.” Translated as “a matter judged,” this legal tenet posits that once a matter has been adjudicated between specific parties, it reaches finality. Any subsequent litigation on the same matter between these parties is prohibited. It is a doctrine that ensures the irrevocability of judicial decisions, thereby bolstering trust in the legal system.

2. The Exclusive Jurisdiction of Federal Courts on Tax Matters

All tax challenges originating from any of the UAE’s emirates are exclusively processed and adjudicated by the Federal Courts in Abu Dhabi. This system operates on three tiers: the Court of First Instance, the Court of Appeal, and the Supreme Federal Court.

3. The Paramountcy of Federal Supreme Court Judgments

Among the plethora of judgments issued, only those from the Federal Supreme Court exert binding influence over lower courts, tribunals, and committees concerning tax matters. This supreme authority suggests that if a tax challenge mirrors a technical or procedural scenario previously addressed by the Supreme Court, and the Court has established a general principle on the matter, that principle should be applicable to the subsequent challenge. However, if the wording of the judgment concerning a specific tax appeal—albeit favorable to taxpayers—did not establish a general principle on a particular tax technical or procedural matter, lower federal courts are not obligated to adopt the same findings.

4. The Non-binding Nature of Lower Court Decisions

While judgments from the lower courts significantly influence the legal landscape, they do not intrinsically possess the authority to bind other tax committees, tribunals, or even the higher strata of the judiciary. Their influence becomes apparent only when they achieve the unassailability of Res Judicata.

5. Interplay with Judgments Issued by Dubai Courts

Although tax challenges from all emirates, Dubai included, are solely channeled through the federal courts in Abu Dhabi, it’s crucial to discern the dynamics between the federal courts and Dubai’s distinct judicial bodies. Decisions from Dubai’s Court of First Instance and Court of Appeal have no bearing on Federal Courts or even the Dubai Court of Cassation. Yet, final and conclusive judgments from the Dubai Court of Cassation may serve as references within the Federal Courts. Ultimately, it’s the prerogative of the Federal Courts to adopt, modify, or reinterpret the principles delineated therein.

To this end, the interplay of court precedents, notably in the realm of tax judgments, is complex. Yet, grasping its nuances, jurisdictional boundaries, and hierarchical structure remains vital. This article aims to illuminate the intricate pathways of the UAE’s legal edifice as it pertains to tax challenges.

Seek Legal Counsel

Our expertise in tax law and regulations allows us to provide clients with effective and accurate tax advice, taking into consideration their unique circumstances and needs. Additionally, our experience and knowledge in handling tax disputes enable us to represent clients in discussions with tax authorities, as well as in court proceedings. 

Our track record of successfully resolving tax disputes and helping clients minimize their tax liabilities has likely earned us a reputation as a trusted and reliable tax advisor. Our tax and financial crimes team, led by our Head of Tax and Financial Crimes, Mohamed El Baghdady, has successfully advised and represented clients across various industries, including, but not limited to, consumer goods and retail, services, real estate, oil & gas and banking and finance, before the government authorities, tax tribunals and courts. Our clients have been successful in multiple tax disputes before the committees and courts.For further information, please contact, Mohamed El Baghdady, Head of Tax and Financial Crimes, on mohamed.elbaghdady@habibalmulla.com  or any of the members of our team.

Mohamed El Khatib

Principal Partner – Head of Disputes
mohamed.elKhatib@habibalmulla.com

Mohamed ElBaghdady

Senior Associate
mohamed.elbaghdady@habibalmulla.com

Marwan Alnooryani

Senior Associate
marwan.alnooryani@habibalmulla.com

Basem Ehab

Associate
basem.ehab@habibalmulla.com

Kholoud Hafez

Associate
kholoud.hafez@habibalmulla.com

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