How to Respond to an FTA Information Request Letter: Dos and Don’ts Every UAE Business Must Know
Receiving an FTA Information Request Letter can be an unsettling moment for any business operating in the UAE. Whether you are a small enterprise or a large corporation, a letter from the Federal Tax Authority (FTA) demands your immediate and careful attention. Understanding how to respond correctly is not just about compliance, it is about protecting your business from unnecessary penalties, reputational damage, and prolonged disputes. This guide walks you through everything you need to know about handling such letters in a professional, compliant, and strategic manner.
What Is an FTA Information Request Letter?
The Federal Tax Authority in the UAE has broad powers to collect information from taxable persons, third parties, and government entities as part of its audit, verification, and compliance activities. An FTA Information Request Letter is a formal communication issued under Federal Decree-Law No. 28 of 2022 on Tax Procedures and its Executive Regulations, requiring the recipient to provide specific documents, records, data, or explanations within a defined timeframe.
These letters may be issued in the context of a VAT audit, a corporate tax review, an excise tax examination, or even a routine compliance check. The scope of information requested can range from sales invoices and purchase records to bank statements, contracts, and employee payroll data. In some cases, the FTA may request clarification on specific transactions or ask for reconciliation between filed returns and financial statements. Regardless of the nature of the request, your obligation to respond is legally binding, and failure to do so can result in significant administrative penalties.
Why the FTA Sends Information Request Letters
Before responding, it is essential to understand why the FTA may have sent you this letter. The authority typically initiates information requests when it identifies discrepancies between submitted tax returns and third-party data, when there are unusually high input VAT claims, or when a business is selected for a routine compliance review. In some cases, the letter may be triggered by information shared between government entities or by a complaint filed by a third party.
Understanding the underlying reason for the request can help you prepare a more targeted and accurate response. If the letter is vague about its purpose, you are within your rights to seek clarification from the FTA before proceeding. However, this should be done promptly and professionally to avoid any suggestion of non-cooperation.
The Dos — How to Respond Effectively to an FTA Information Request Letter
Do Read the Letter Carefully and Understand the Scope: The first and most important step is to read the FTA Information Request Letter in its entirety. Identify the specific documents and information being requested, the timeframe given for the response, and the designated contact point at the FTA. Many businesses make the mistake of either over-responding by providing unnecessary documents or under-responding by missing key items. A careful reading ensures you respond precisely to what has been asked.
Do Engage a Qualified Tax Professional Immediately: The moment you receive an FTA Information Request Letter, engage a qualified UAE tax advisor or tax consultant. This is not the time for trial and error. Tax professionals who are experienced with FTA audit procedures understand the authority’s expectations, know how to frame responses legally and accurately, and can help you avoid making admissions or providing information that could inadvertently trigger a deeper audit. Professional guidance at this stage is an investment, not an expense.
Please gather and organise your records systematically: Once you understand the scope of the request, begin gathering all relevant documents in an organised manner. Ensure that your VAT returns, tax invoices, credit notes, contracts, and ledgers are properly maintained and easily accessible. UAE tax law requires businesses to retain records for a minimum of five years, and in certain cases, seven years for real estate-related records. If your records are well-maintained, responding to an FTA information request becomes significantly less stressful.
Do Respond Within the Specified Deadline: Timeliness is critical when responding to an FTA Information Request Letter. The FTA sets specific deadlines, and missing them without a valid reason can result in administrative penalties. If you genuinely need more time to compile the requested information, you may request an extension from the FTA before the deadline expires. Document this request in writing and ensure it is submitted through the proper channels, such as the Emara Tax portal.
Do Be Transparent, Accurate, and Consistent: When preparing your response, ensure that all information provided is accurate, complete, and consistent with your previously filed tax returns. Any inconsistency between your response and your filed returns can raise red flags and potentially escalate the matter to a formal tax audit. Transparency is always the best policy. If there are errors in previous filings, it is generally better to disclose them proactively rather than allow the FTA to discover them independently.
The Don’ts — Common Mistakes to Avoid When Responding
Don’t ignore the Letter or Delay Your Response; Ignoring an FTA Information Request Letter is one of the most costly mistakes a business can make. Under the UAE Tax Procedures Law, non-compliance with FTA information requests can result in administrative penalties of up to AED 20,000, depending on the nature and frequency of the violation. Beyond the financial cost, ignoring such a letter signals non-cooperation, which can prompt the FTA to escalate the matter to a full audit or invoke its powers to estimate the tax payable.
Don’t Provide More Information Than What Is Requested: While transparency is important, over-sharing can be equally problematic. Providing documents or information that were not requested can open new lines of inquiry and potentially expand the scope of the FTA’s review. Respond specifically and precisely to what has been asked. If you are unsure whether a particular document is relevant, consult your tax advisor before including it in your response.
Don’t Allow Unauthorised Personnel to Handle the Response : Responding to an FTA Information Request Letter is a legal and technical matter. It should not be delegated to junior staff or handled by individuals without a clear understanding of UAE tax law. Errors made in responses — whether through miscommunication, incorrect data, or improper formatting — can have serious legal consequences. Appoint a responsible and knowledgeable person within your organisation, ideally supported by an external tax consultant, to manage the entire process.
Don’t Assume the Request Is a Routine Matter: Even if the FTA Information Request Letter appears to be a standard compliance check, never treat it as a routine administrative matter. Every information request has the potential to develop into a formal audit if the FTA finds irregularities in your response or your records. Approach every letter with the same level of seriousness and due diligence, regardless of how routine it may seem.
Don’t Make Verbal Commitments Without Written Confirmation: If you or your tax representative communicates with the FTA regarding the information request, whether by phone, email, or in person, avoid making verbal commitments that are not documented in writing. All communications related to the request should be formally recorded and submitted through official channels. This protects your legal position and ensures there is a clear audit trail of all interactions.
After Submitting Your Response — What Happens Next?
Once you have submitted your response to the FTA Information Request Letter, the authority will review the information provided. If the FTA is satisfied with your response and finds no discrepancies, the matter may be closed without further action. However, if the authority requires additional information or identifies potential issues, it may issue a follow-up request or escalate the matter to a formal tax audit.
During this period, it is important to remain cooperative and available. Continue to keep your tax records organised and updated, and maintain open communication with your tax advisor. If the FTA determines that there is a tax liability, you will be issued a Tax Assessment, against which you have the right to object and appeal through the prescribed legal channels.
Record-Keeping Best Practices to Prepare for Future FTA Requests
One of the most effective ways to handle FTA Information Request Letters with confidence is to maintain impeccable records at all times. UAE businesses are required to maintain accurate books of accounts, VAT records, tax invoices, and supporting documents throughout the year, not just when an audit or information request arises. Cloud-based accounting systems that are integrated with VAT compliance modules can significantly reduce the burden of record retrieval when an FTA request is received.
Conducting regular internal reviews of your tax filings, reconciling your VAT returns with your financial statements quarterly, and performing periodic tax health checks are all proactive measures that position your business to respond to any FTA inquiry with speed and confidence.
About My Taxman
Navigating FTA Information Request Letters and UAE tax compliance obligations can be complex, time-sensitive, and high-stakes. That is where My Taxman comes in. My Taxman is a trusted UAE-based tax consultancy firm specialising in VAT advisory, corporate tax compliance, FTA audit support, and tax dispute resolution. With a team of experienced tax professionals who have deep knowledge of the UAE’s evolving tax landscape, My Taxman helps businesses of all sizes respond to FTA communications effectively, minimise their tax risk, and maintain full compliance with Federal Tax Authority requirements. Whether you have just received your first FTA Information Request Letter or are looking to strengthen your ongoing tax compliance framework, My Taxman is your reliable partner every step of the way.
