Dubai Refreshments' factory at Al Quoz... The company is the local bottler for Pepsi and its sister brands. Image Credit: Ahmed Ramzan/Gulf News

Dubai: The UAE’s Federal Tax Authority will have to re-compensate the F&B company Dubai Refreshments on administrative penalties imposed on it.

This follows a judgement passed by the UAE Federal Supreme Court, which dismissed an appeal filed by FTA. This is considered to be the “first time the federal Supreme Court issued a judgement in favour of a tax payer,” said Baker McKenzie Habin Al Mulla, the lawyer for Dubai Refreshments, in a statement.

The Federal Supreme Court stated the FTA “wrongly imposed administrative penalties, because the FTA imposed them on the incorrect premise that the company had collected funds as tax, and had not reported or voluntarily declared such tax”.

Earlier wins

Both the Court of First Instance and Court of Appeal earlier rejected the FTA's appeal against the previous decision of the Tax Dispute Resolution Committee, and allowed the company's counter appeal against the decision of the TDRC.

“These judgments confirm the robustness of the UAE judiciary with respect to the adjudication of tax matters, upholding taxpayers' lawful rights to challenge the FTA’s assessment on taxes and penalties,” the law firm said in a statement. “When challenging the FTA’s assessment, taxpayers should adhere to the specific procedures and timeline for re-calculations, reconsiderations and objections before the TDRC and the relevant UAE courts.”