Article 1 of Federal Law No. 7 of 2017 on Tax Procedures (“Tax Procedures Law”) defines tax assessment as a decision issued by the Federal Tax Authority (the “Authority”) relating to tax payable or refundable tax. According to this definition, the tax assessment is an administrative activity carried out by the Authority, whereby the taxable person is required to pay a certain amount due to the State. In this activity, the Authority relies on tax laws and regulations. This activity creates a legal status for the Authority as the creditor in the tax debt, and the debtor’s status of the person subject to it in that debt.
Clarifying the jurisdiction of a dispute against the Authority and whether such a dispute is an administrative dispute that is heard before the administrative circuit of the Federal Court requires the confirmation of certain elements: (1) whether the Authority is a government body; (2) whether the relationship between the taxable person and the Authority justifies an administrative relationship; (3) there is an Administrative reason; and (4) there is an administrative objective.
In this sense, the tax assessment is an activity that carries in itself all the elements of an administrative decision. It is issued by the Authority, which is a governmental body to which the law of its establishment (Federal Law by Decree No. 13 of 2016 Concerning the establishment of the Federal Tax
Authority) provides it the power and authority to undertake tax assessments, and with this authority administrative jurisdiction is achieved.
The tax assessment appears in the form of a written notice containing different data such as a date, reference number, taxable person’s name, tax number, tax type, net amount and due date. The tax assessment has the legal effect of creating a legal status for the taxable person as a debtor to the government of the amount of the tax payable supporting the administrative jurisdiction of the relationship with the Authority.
The Authority shall not issue tax assessment unless the person carries out the activities for which the tax is payable under the provisions of the tax laws. The practice of such acts is the factual situation that prompts the Authority to issue a tax assessment. In this case, the reason is achieved.
The tax assessment is an objective to achieve the public interest, which is the confirmation of the right of the State to claim the amount of tax due, fulfilling the requirement for an administrative objective.
In summary, the “tax assessment” is an administrative decision issued by a competent administrative authority, in a particular form, has a place and produces a legal effect, and a reason for issuing it and an objective it seeks to achieve.
The “tax assessment” is considered an administrative decision, subject to the provisions of the dispute in the case of challenging the administrative decision, in terms of the competent court to consider the dispute, and the date of filing the challenge. As well as in terms of not being subject to the dispute to the Center for Reconciliation and Settlement prior to its consideration by the Court. Under these provisions, the Federal judiciary is exclusively competent to consider the disputes to which the State is a party, and the date of the cancellation of the administrative decisions (60) days from the date of publication of the contested decision or declaration by the concerned party or proven knowledge thereof.
However, the Tax Procedures Law provided provisions, so the tax dispute (which is an administrative dispute) goes through two stages, one administrative and the other judicial.
The administrative stage begins with an application submitted by the taxable person to the Authority to review its decision on the tax assessment within twenty working days from the date of notification of the decision of the assessment. If the reconsideration is not accepted by the taxable person, the taxable person may object to it before an administrative committee dubbed the “Tax Dispute Resolution Committee” within twenty working days from the date of notification of the reconsidered assessment.
According to Article (31/5) of the Tax Procedures Law, tax disputes are not accepted before the competent court if the objection is not first addressed before the Committee. By presenting the dispute before the competent court (within twenty working days of the decision of the Committee), which must be a Federal court, the judicial stage begins. The dispute shall be heard before the primary, appeal and cassation stages in accordance with the rules and procedures followed in the case of administrative proceedings.
Precedent to File Court Action Without Resorting to the Committee
With that said, Federal Supreme Court case number 674 of 2008 (heard on 16 June 2008) oversaw a contested judgment that was inadmissible as it was filed in manner different from the manner determined by law and documents contained no reference to the fact that the dispute was referred
to the Conciliation and Arbitration Committee in the competent Federal court before which the action was filed, whilst the court did not have such a committee established at the time. The judgment has therefore erred and necessitates its cassation.
The objection was found valid, since Article (1) of Federal Law No. 4 of 2001, amending of some provisions of Federal Law No. 26 of 1999 Concerning Establishing Conciliation and Arbitration Committees (now abrogated) stipulates that:
“The Minister of Justice, Islamic Affairs and Endowments shall decide to set up one or several Committees at the seat of every Civil or Shari’a Federal Court of First Instance…”
Article (3) para. 1 thereof stipulates that:
“Federal Courts of First Instance in which Conciliation and Reconciliation Committee were established must not register any lawsuit falling within the jurisdiction of the Committee unless concerned parties submit a no objection letter issued by the Conciliation and Reconciliation Committee.”
The Federal Supreme Court found that if the Minister of Justice does not issue a decree for establishing these committees, litigants may plead before the competent court directly. In this particular case, as no ministerial decree for establishing a committee in the Federal Court of First Instance that was hearing the date was issued at the date of filing the court action, the action was found to be admissible without submitting the above-mentioned statement.
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