Proposed Amendment to Tax Administration Act Raises Payment Requirements for Tax Appeals
The Government has submitted a Bill to amend the Tax Administration Act1, proposing significant changes to the amount of tax required to be paid by taxpayers prior to filing an appeal at the Tax Appeal Tribunal
Under the current framework, a taxpayer appealing to a tax assessment made by MIRA under section 39 of the Tax Administration Act is required to pay 25% of the amount in dispute before filing an appeal. The Bill proposes to increase this requirement to 50% of the disputed amount. As currently practiced, this percentage would be calculated on the amount in dispute, excluding any related fines or interest.
In addition to doubling the general amount of tax that must be paid before proceeding with an appeal, the Bill also proposes that 100% of the disputed tax amount must be paid before appealing to the Tax Appeal Tribunal where the assessment relates to any of the following types of transactions:
- Transactions falling within the general anti-avoidance rule under the Income Tax Act2;
- Transactions between associates under the Income Tax Act;
- Related-party transactions under the GST Act3; and
- Transactions between unrelated parties falling within the proposed provision in the new GST bill submitted to the Parliament.
If enacted, these amendments would materially raise the financial threshold for taxpayers seeking to challenge MIRA assessments before the Tax Appeal Tribunal. The effect would be particularly significant for transfer pricing and other assessments falling within the proposed 100% payment categories, as taxpayers would be required to settle the full amount in dispute before lodging an appeal to the Tax Appeal Tribunal.
The above proposed changes will only take effect once the Bill is passed by the People’s Majlis, ratified by the President and published in the Government Gazette.
