When a UAE tax regulation goes beyond the law: how a taxpayer can challenge subordinate legislation

In tax practice, taxpayers may face situations where the real problem is not only the tax assessment, penalty, refund refusal, or another individual act issued by the Federal Tax Authority (“FTA”), but the legal rule on which that act is based. The taxpayer may consider that a Cabinet Decision, Ministerial Decision, FTA decision, or another subordinate instrument has gone beyond the parent federal law.

The first answer is often expressed in one of two simplified forms. One may say that the taxpayer should “challenge the regulation”. Another may say that any issue involving subordinate legislation must necessarily go to the Federal Supreme Court (“FSC”), because only the FSC may decide questions of constitutionality. Both formulations are incomplete.

The UAE position is more nuanced. The cases show that one must distinguish several different questions:

• The first is whether a regulatory administrative decision may be attacked at all. 
• The second is whether the attack is an ordinary legality challenge, because the subordinate instrument departs from the parent law. 
• The third is whether the challenge is truly constitutional, because the text is said to conflict with the Constitution itself. 
• The fourth is whether the matter may be brought directly before the FSC, or only through a plea raised in a concrete dispute.

This article addresses these questions by reference to the constitutional framework and the available case law of the FSC. It examines how UAE law separates administrative legality, constitutional review, and the procedural requirement that the challenged rule be connected with a concrete dispute.

Constitutional limits on delegated legislation

1. The starting point is Article 60(5) of the UAE Constitution. It authorises the Council of Ministers to issue regulations necessary for implementing federal laws, but only insofar as such regulations do not amend the laws, suspend their application, or exempt particular persons from them. It also permits a competent minister or other administrative authority to issue some of those regulations if authorised by a special provision of the law or by the Council of Ministers.
2. This provision is important because it separates implementation from amendment. An executive instrument may organise the application of a federal tax law. It may specify forms, procedures, administrative conditions, documentary requirements, or technical rules. But it may not rewrite the legislative rule.
3. Article 151 of the Constitution states the broader hierarchy of norms. If inferior legislation conflicts with superior legislation, the conflicting part is null and void to the extent necessary to remove the conflict. In case of dispute, the matter is referred to the FSC. Article 101 also confirms that, where the FSC finds that local legislation or a regulation contains provisions contrary to the Constitution or federal law, the competent authority must immediately remove or correct the violation.
4. Read in isolation, these provisions may suggest a simple conclusion: if a subordinate act conflicts with a parent law, the issue must be referred to the FSC. However, the FSC’s constitutional case law does not support such a broad formula. It draws a significant distinction between unconstitutionality and ordinary illegality.

Not every inconsistency is a constitutional issue

5. The clearest authority is Constitutional Case No. 2 of 2018, judgment of 19 November 2018. The case concerned Ministerial Decision No. 972 of 2017, the implementing regulation of Federal Law No. 23 of 1991 regulating the legal profession. The claimant argued, among other things, that provisions of the Ministerial Decision amended or restricted the federal law and therefore contravened Article 60 of the Constitution.
6. The FSC stated the governing rule in precise terms. Its constitutional review of legislation concerns “the conflict of the challenged legal texts with the provisions contained in the Constitution”. It then assesses the connection between the challenged text, the constitutional provision relied upon, and the substantive dispute in which the plea was raised.
7. This matters because the Court then rejected one part of the challenge as being outside constitutional review. It held that where “the alleged contradiction is between a lower legislative text and the law under which the first text was issued and in implementation of which it was made”, that complaint “is not within the field of a constitutional challenge”. The Court treated the argument that a ministerial decision had departed from the parent law as an allegation of lack of legality, not as a constitutional issue. The Court also said that a plea alleging that the ministerial decision was unlawful because it departed from the content of the law it was issued to implement was a matter “which the scope of the constitutional action does not encompass”.

8. The same point was repeated in Constitutional Case No. 4 of 2020, judgment of 26 April 2021. The FSC stated that a complaint based on a contradiction between an inferior legislative text and a superior law, where the inferior text was issued within the scope of or in implementation of that superior law, “revolves around illegality and is not within the field of a constitutional plea”.
9. This is central for tax disputes. If a taxpayer merely argues that a Cabinet Decision, Ministerial Decision, or FTA decision contradicts the Corporate Tax Law, VAT Law, Excise Tax Law, or Tax Procedures Law, the issue is not automatically constitutional. It may be a serious legality issue. It may make the individual tax act unlawful. But the FSC’s case law suggests that a parent-law inconsistency does not, by itself, become a constitutional question.
10. The point may become constitutional only if it is framed as a violation of the Constitution itself. For example, the taxpayer may argue that the subordinate instrument did not merely misread the parent law, but exceeded constitutionally permissible delegated power under Article 60(5). Even then, the framing must be careful. Constitutional Case No. 2 of 2018 shows that the FSC will not accept a constitutional label if the real substance of the complaint is only that a lower rule departed from the statute it was issued to implement.

Article 60(5) and delegated competence

11. Constitutional Case No. 2 of 2018 is also useful for another reason. It shows how the FSC examines Article 60(5). The claimant argued that the Ministerial Decision had been issued by an incompetent authority because Article 60 vested the power to issue implementing regulations in the Council of Ministers. The FSC rejected that argument. It noted that Article 60 permits a minister or another executive authority to be assigned the power to issue such regulations by a special provision in the law or by a decision of the Council of Ministers. 
12. The Court then referred to Article 63 of Federal Law No. 23 of 1991, which authorised the Minister of Justice to issue the regulations and decisions necessary for implementing the law regulating the legal profession. On that basis, the allegation that Ministerial Decision No. 972 of 2017 was unconstitutional for breach of Article 60 was rejected.
13. For tax purposes, this has two consequences.

• First, a taxpayer should not assume that the mere fact that a Ministerial Decision has been issued by a minister rather than by the Council of Ministers makes it constitutionally vulnerable. If the parent tax law or a Cabinet Decision authorises the minister or the FTA to issue implementing rules, Article 60(5) may be satisfied at the level of competence.
• Second, the more promising issue is not always competence in the formal sense, but the boundary between implementation and amendment. If the subordinate act adds a substantive tax condition, narrows a statutory exemption, expands taxable income, or creates a compliance requirement that effectively changes the taxpayer’s substantive position, the taxpayer’s argument should explain why the rule is no longer implementation but amendment. Even then, the taxpayer must decide whether to present this as illegality within the tax dispute or as a genuine constitutional issue under Article 60(5).

The procedural route to the FSC

14. The FSC’s constitutional jurisdiction is not a general public action available to any interested person. This is clear from Constitutional Case No. 3 of 2021, judgment of 27 September 2021. The Court stated that the federal authority and local authorities of the Emirates have the right to challenge the constitutionality of legislation within the limits prescribed by the Constitution. It also stated that courts may request constitutional review of laws, legislation, and regulations while hearing a case. If the constitutional action is brought by someone other than those bodies, it is an original or direct constitutional action and is inadmissible.
15. Constitutional Case No. 4 of 2020 expresses the same proposition in more developed terms. The FSC said that the right to use this constitutional litigation mechanism is confined to specified bodies: 

• one or more Emirates, 
• one of the federal authorities, or 
• a referral from one of the State courts, whether federal or local, when a constitutional plea has been raised and accepted, or when the court itself suspects the unconstitutionality of a legal text before it.

16. Therefore, a taxpayer does not normally file directly before the FSC asking it to declare a tax regulation unconstitutional. The taxpayer raises the plea in the substantive dispute. The court hearing that dispute must accept that the plea is serious and procedurally relevant. Only then can the matter reach the FSC through the route prescribed by Article 99(3) of the Constitution and the Federal Supreme Court Law.
17. This conclusion also requires a correction to a common misunderstanding. The fact that Article 151 refers disputes on conflicts between inferior and superior legislation to the FSC does not mean that every taxpayer can bypass the ordinary tax litigation route and file an original constitutional claim before the FSC. The attached constitutional cases show that access to the FSC is structured and limited. The taxpayer’s route is through the court seized of the concrete dispute.

Requirements for a valid constitutional referral

18. Constitutional Case No. 3 of 2018, judgment of 2 July 2019, is particularly important for the mechanics of referral. The FSC explained that its jurisdiction over constitutional matters is activated only through the procedures drawn by law. If those procedures are not followed, the constitutional action is inadmissible.
19. The Court identified two matters it must verify when a constitutional issue is referred by a court. First, there must be a referral decision from one of the State courts. Second, the content of the referral decision must be adequate.
20. The FSC stated that the court raising the constitutional doubt must issue a reasoned decision during a pending case, referring the request to examine the constitutionality of the legislative text to the FSC. The referral decision must identify: 

1. the legislative text suspected of unconstitutionality; 
2. the constitutional text relied upon; and 
3. the direct connection between the constitutional provision and the challenged text expected to be applied to the facts of the substantive dispute. 

The Court added that the constitutional text must either be directly connected to the challenged legislative text or constitute a “vital space” for it, so that the challenged text cannot produce its legal effects away from that constitutional space.

21. The Court described the constitutional question as an objective request presented to the FSC so that it may clarify whether the text is affected by a suspicion of non-conformity with the Constitution, remove that suspicion, apply the text compatible with the Constitution, and refrain from applying what contradicts it.
22. The case also shows the consequence of an inadequate referral. The referral in that case was held defective because it failed to identify the constitutional text relied upon. That omission was treated as a fundamental defect depriving the referral of legal reasoning and preventing the FSC from validly being seized of the constitutional action.
23. For a taxpayer, this is not a technical point. It means that a general statement that a tax regulation is “contrary to the hierarchy of norms” will not be enough for constitutional review. If a constitutional plea is to be made, it must identify the constitutional provision, the subordinate text, and the direct relevance of the constitutional issue to the pending tax dispute.

Why the constitutional route is not “available to all”

24. The FSC repeatedly explains why constitutional review is not available as a free-standing litigation vehicle to anyone dissatisfied with legislation.
25. In Constitutional Case No. 2 of 2018, the Court said that a constitutional challenge affects the presumption of constitutional legitimacy enjoyed by existing legislation and the stability of legal positions created under it. For that reason, the Court must exercise caution and verify the correctness of the procedure and the standing and interest of the claimant. The Court said this protects the legislative system from being dragged into rushed and useless judicial disputes that may harm the cohesion of State institutions, social stability, and the integrity of legislation.
26. Constitutional Case No. 4 of 2020 repeats and develops the same idea. The Court described the constitutional action as objective in nature, directed at a principal text or subordinate regulations suspected of constitutional defect. Because it affects the presumption of constitutional legitimacy and the legal positions created under legislation, the legislator and the Court do not expand the exercise of that right. 

Administrative annulment of a general regulatory decision

27. The constitutional route must be separated from administrative annulment. The most useful authority is Administrative Cassation No. 837 of 2019, judgment of 13 April 2020. The FSC stated that an annulment action is the action seeking annulment of an administrative decision in order to reveal its defects, whether that administrative decision is individual or regulatory. However, the claimant must have a personal interest directly affected by the decision; the decision must have cancelled, altered, or otherwise affected his legal position.
28. The Court then added the key limitation. Although a general regulatory decision may in principle be challenged, the claimant must, in such a case, also challenge the individual decision issued in application of that regulatory decision. If no individual administrative decision exists in that respect, the action is inadmissible.
29. The Court dismissed the claim because the appellant had sought annulment of Ministerial Decision No. 972 of 2017 concerning the implementing regulation of the law regulating the legal profession, without also challenging an individual decision issued in implementation of that regulation.
30. This precedent should not be overstated. Administrative Cassation No. 837 of 2019 does not prove that a taxpayer can always bring a stand-alone abstract claim against a Cabinet Decision, Ministerial Decision, FTA decision, or another regulatory instrument. It proves something more precise: a regulatory administrative decision may, in principle, be the object of an annulment action, but the action must not be abstract. The claimant must show direct personal interest and connect the regulatory act to an individual implementing decision.
31. This conclusion is also consistent with the FSC’s broader approach to direct personal interest in Constitutional Case No. 4 of 2020. In that case, the Court explained that the required interest is not satisfied by a theoretical objection to the quality, correctness, or legality of a regulatory text. The claimant must show real harm to a right, or deprivation of a legitimate legal position, and that harm must result from the application of the challenged text to him. If:

1. the text does not apply to the claimant, 
2. he is not among those addressed by it, or
3. the alleged violation results only from interpretation or mistaken application rather than from the text itself, 

the required direct interest may be absent.

32. For tax disputes, this is crucial. The individual implementing decision will usually be an FTA assessment, penalty, refund refusal, deregistration refusal, or another decision that applies the contested rule to the taxpayer. After the statutory tax dispute process, the TDRC decision will also crystallise the dispute. The regulatory rule moves from the abstract plane into the taxpayer’s concrete legal position only when it has been applied through such an individual act.

Tax disputes and the TDRC as a quasi-judicial stage

33. In federal tax matters, the dispute does not move immediately from the FTA to an ordinary court. It normally passes through the statutory tax dispute route, including the TDRC.
34. The TDRC is a quasi-judicial body operating under the Ministry of Justice framework. It is not merely an internal administrative appeal within the FTA. It resolves tax disputes through a panel presided over by a judge and including authorised experts. Its decision is then the decision that may be appealed before the competent court under the Tax Procedures Law.
35. This matters for challenges to subordinate legislation. The taxpayer should not frame the matter as an abstract challenge to a regulatory instrument. The taxpayer should challenge the individual tax consequence and argue, in that dispute, that the rule applied by the FTA and then addressed by the TDRC was unlawful because it exceeded the parent law or, if properly framed, unconstitutional because it exceeded the constitutional limits of delegated regulation.
36. The procedural position may therefore be described in two different, but related, ways.
    1. The first and safer formulation is plea-based. The taxpayer challenges the individual tax consequence: an assessment, penalty, refund refusal, other FTA decision, or the TDRC decision. In that dispute, the taxpayer argues that the individual act is unlawful because the subordinate rule applied to him went beyond the parent federal law. 
       
       If the point is one of ordinary legality, the competent court should be able to resolve it within the case before it. If, however, the court considers that a genuine constitutional issue arises, and the legal conditions for constitutional review are met, the matter may reach the FSC through the prescribed procedural route.

2. The second formulation is claim-based. Administrative Cassation No. 837 of 2019 suggests that, where UAE administrative procedure permits, the claimant may bring an annulment claim not only against the individual implementing decision, but also against the general regulatory administrative decision on which it is based. The challenge to the regulatory decision is not admissible in the abstract. It becomes admissible only because the regulatory decision has been applied to the claimant through an individual decision affecting his legal position.

37. The consequence of the second formulation is different from the plea-based formulation.
    1. In the first formulation, the regulatory instrument is not itself the object of the court’s operative ruling. The court decides the challenge to the individual tax act and may treat the subordinate rule as unlawful, inapplicable, or incapable of supporting that act, but it does not annul the general regulatory decision as such. If the taxpayer seeks a formal ruling affecting the regulatory decision itself, that result is not achieved merely by raising a plea in the individual tax dispute.
    2. In the second formulation, by contrast, the claim against the regulatory administrative decision is itself before the competent court. The case is therefore not limited to the validity of the individual implementing decision. It also includes, as a separate object of adjudication, the requested annulment of the general regulatory administrative decision on which that individual decision was based.

The court must deal with that claim, provided that it is procedurally admissible and supported by direct personal interest through the individual implementing decision. This remains true regardless of whether the alleged defect is presented as ordinary illegality or as a constitutional defect. The difference lies in how the court may dispose of the claim:

• If the defect is one of ordinary administrative legality (for example, that the regulatory decision departed from the parent law under which it was issued), the competent court may itself decide whether to annul or refuse to annul the regulatory administrative decision. 
• If, however, the alleged defect is genuinely constitutional, the ordinary court cannot finally determine the constitutional question as such; that issue may reach the FSC only through the prescribed procedural channel. 

But even in the latter case, the claim for annulment of the regulatory administrative decision remains part of the case and must be addressed in the court’s disposition after the constitutional issue is resolved or rejected as unnecessary.

38. This is why the distinction between a plea and a claim matters. A plea may defeat the individual tax act without formally removing the regulatory decision from the legal order. A claim, if admissible, requires the court to decide whether the regulatory administrative decision itself should be annulled.

Can the court decide the case under the parent law or the Constitution without referral to the FSC?

39. This is the most delicate point and should be stated cautiously. UAE law does not appear to contain an express procedural formula equivalent to a rule that, whenever a subordinate normative act conflicts with a superior act, the court must simply apply the act of higher legal force. 
40. However, the FSC cases indicate that not every inconsistency between subordinate legislation and the parent law is a constitutional issue requiring referral to the FSC. On the contrary, the Court has repeatedly distinguished between unconstitutionality and illegality. A complaint that a lower legislative or regulatory text contradicts the law under which it was issued, or the law it was intended to implement, is ordinarily a question of legality, not constitutionality.
41. This distinction is important for the role of the competent court. If the taxpayer does not seek annulment of the regulatory administrative decision itself, but only challenges an individual tax consequence, the court may still have to examine whether that individual act has a valid legal basis. In that setting, the parent-law inconsistency operates as a plea or ground of challenge. The taxpayer argues that the FTA decision, TDRC decision, assessment, penalty, or refusal is unlawful because the subordinate rule applied to him departed from the parent federal law.
42. In that plea-based formulation, the competent court may decide the legality issue within the concrete dispute before it. It may annul or vary the individual tax act, refuse to treat the subordinate rule as a sufficient legal basis for that act, or interpret the subordinate rule consistently with the parent law where such interpretation is possible. What the court does not do in that formulation is annul the regulatory administrative decision itself with general effect, because that decision is not the object of the claim.
43. The position is different if the taxpayer brings a claim-based challenge and seeks annulment not only of the individual implementing decision, but also of the general regulatory administrative decision on which it is based. Administrative Cassation No. 837 of 2019 supports the view that such a regulatory administrative decision may in principle be the object of an annulment action, provided that the claim is not abstract: the claimant must have a direct personal interest and must also challenge the individual decision issued in application of the regulatory decision.
44. In that claim-based formulation, the competent court is not limited to the individual decision. The request to annul the regulatory administrative decision is itself part of the case. If that claim is admissible, the court must deal with it. Where the alleged defect is ordinary administrative illegality (for example, that the regulatory decision exceeded the scope of the parent law, added substantive conditions not found in that law, or otherwise departed from the law it was issued to implement) the competent court may decide that issue itself by annulling or refusing to annul the regulatory administrative decision.
45. The fact that the regulatory decision is general in nature does not, by itself, convert the issue into a constitutional one. The constitutional cases suggest the opposite: a conflict between a subordinate text and the parent law remains, in principle, an issue of legality unless the challenge is directed at a breach of the Constitution itself. Therefore, where the complaint is confined to inconsistency with the parent legislation, the matter should not automatically be transferred to the FSC.
46. A constitutional referral becomes relevant only where the challenge is genuinely constitutional and the constitutional issue is necessary for deciding the dispute. If the taxpayer merely argues that the subordinate act departed from the parent law, the matter remains one of ordinary legality and may be decided by the competent court. But if the taxpayer’s case depends on the proposition that the subordinate act itself violates the Constitution, the ordinary court should not finally determine that constitutional question.
47. This follows from the FSC’s approach to constitutional review. In Constitutional Case No. 2 of 2018, the Court emphasised that constitutional challenges must be approached with particular caution because they affect the presumption that legislation is constitutionally valid and because constitutional review may disturb settled legal positions. Constitutional Case No. 4 of 2020 repeats the same logic and links admissibility of constitutional review to strict procedural requirements, including proper standing and direct personal interest.
48. Accordingly, where the taxpayer has brought only a claim against the individual act, the court may still resolve the case itself if it can do so without deciding the constitutional validity of the subordinate regulation. It may annul the individual act on ordinary legality grounds, interpret the subordinate rule consistently with the parent law, or reject the constitutional plea as unnecessary or not serious. But if the court considers that a genuine constitutional issue is serious, relevant, and necessary for the outcome, the matter must be referred to the FSC. The ordinary court cannot itself annul the regulatory act, or refuse to apply it, on the ground that it is unconstitutional.
49. Thus, the better view is not that every contradiction between subordinate and parent legislation must be sent to the FSC. If the complaint is only that the subordinate instrument exceeded, contradicted, or improperly implemented the parent federal law, the matter is ordinarily one of administrative legality. In that situation, the competent court may decide the issue itself within the limits of the claims before it. 

If the inconsistency is raised only as a plea in an individual tax dispute, the court may use it to resolve the legality of the individual act. If the taxpayer also brings an admissible annulment claim against the regulatory administrative decision, the court must decide that claim by annulling or refusing to annul the regulatory decision.

Practical formulation and conclusion

50. The practical consequence is that a taxpayer should be careful not to describe every challenge to a subordinate tax instrument as a constitutional challenge. The first question is usually more concrete: what is the individual tax consequence being challenged, and what legal rule was applied to produce it?
51. In most cases, the taxpayer’s argument should begin with the parent federal tax law. The submission should identify the statutory rule and then explain why the Cabinet Decision, Ministerial Decision, FTA decision, or other subordinate instrument does more than implement that rule. The relevant point may be that the subordinate instrument adds a condition not found in the statute, narrows a statutory exemption, expands a taxable base, imposes a substantive burden, or otherwise changes the taxpayer’s position in a way that the parent law does not permit.
52. The next step is to connect that defect with the individual act affecting the taxpayer. In tax disputes, this will usually be an assessment, penalty, refund refusal, deregistration refusal, other FTA decision, or the TDRC decision confirming the disputed position. Without that connection, the challenge risks becoming an abstract attack on the quality of regulation, rather than a concrete dispute about the taxpayer’s legal position.
53. Where the taxpayer seeks only to challenge the individual tax consequence, the subordinate rule operates as a ground of illegality. The taxpayer asks the competent court to annul or vary the individual act, or to refuse to treat the subordinate rule as a valid legal basis for that act, because the rule exceeded or contradicted the parent federal law. In that formulation, the court’s decision concerns the individual act, not the formal removal of the regulatory instrument from the legal order.
54. If the taxpayer also seeks annulment of the regulatory administrative decision itself, that claim must be framed separately and carefully. The claimant must show direct personal interest through an individual implementing decision and must bring the regulatory decision itself before the court as an object of the annulment claim. If the claim is admissible and the defect is one of ordinary administrative legality, the competent court may decide whether to annul or refuse to annul the regulatory administrative decision.
55. A constitutional plea should be reserved for a different situation. It is not enough to say that the subordinate instrument contradicts the parent law. The plea must identify a constitutional provision, the challenged text, and the direct relevance of the constitutional issue to the pending dispute. If the issue is genuinely constitutional, serious, relevant, and necessary for the outcome, it must proceed through the prescribed route to the FSC. The ordinary court should not itself annul or disregard a regulatory act on the ground that it is unconstitutional.

Disclaimer

Pursuant to the MoF’s press-release issued on 19 May 2023 “a number of posts circulating on social media and other platforms that are issued by private parties, contain inaccurate and unreliable interpretations and analyses of Corporate Tax”.

The Ministry issued a reminder that official sources of information on Federal Taxes in the UAE are the MoF and FTA only. Therefore, analyses that are not based on official publications by the MoF and FTA, or have not been commissioned by them, are unreliable and may contain misleading interpretations of the law. See the full press release here. 

The same reservation applies to the judicial, constitutional, and procedural issues addressed in this article. This study has not been commissioned, authorised, or endorsed by the Ministry of Justice, the Federal Supreme Court, or any other judicial authority in the UAE. It is not intended to convey, and should not be understood as conveying, any official position of those authorities. Nor does it purport to suggest that the interpretations, conclusions, or proposals set out in it are binding on the courts or must necessarily be adopted in judicial practice.

You should factor this in when dealing with this article as well. It is not commissioned by the MoF or FTA. The interpretation, conclusions, proposals, surmises, guesswork, etc., it comprises have the status of the author’s opinion only. Furthermore, it is not legal or tax advice. Like any human job, it may contain inaccuracies and mistakes that I have tried my best to avoid. If you find any inaccuracies or errors, please let me know so that I can make corrections.