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Beginning on January 1, 2018, the UAE government has already imposed VAT on providing taxable goods and services. The Federal Tax Authority (FTA) may audit tax-required companies to ascertain compliance with tax laws.
First, let us understand what a tax audit is!
A tax audit is a process conducted by the government about the obligations of a business as a taxable entity. The FTA performs this type of audit to ensure all duties are fulfilled and all taxes are gathered and submitted to the government on schedule. Following tax regulations, the government evaluates whether a business adheres to specific obligations (VAT Law, Excise Tax Law, etc.).
The FTA performs this type of audit to ensure all obligations are fulfilled, and all taxes are gathered and submitted to the government on schedule.
A “field tax audit” is conducted at the taxable person’s place of business. The FTA’s offices may host a tax audit, and the taxpayer will typically be notified before an audit.
Beginning on January 1, 2018, the UAE government has already imposed VAT on providing taxable goods and services. The Federal Tax Authority (FTA) may audit tax-required companies to ascertain compliance with tax laws.
First, let us understand what a tax audit is!
A tax audit is a process conducted by the government about the obligations of a business as a taxable entity. The FTA performs this type of audit to ensure all duties are fulfilled and all taxes are gathered and submitted to the government on schedule. Following tax regulations, the government evaluates whether a business adheres to specific obligations (VAT Law, Excise Tax Law, etc.).
The FTA performs this type of audit to ensure all obligations are fulfilled, and all taxes are gathered and submitted to the government on schedule.
A “field tax audit” is conducted at the taxable person’s place of business. The FTA’s offices may host a tax audit, and the taxpayer will typically be notified before an audit.
Not all VAT-registered businesses will be subject to audits, and the frequency of tax audits is not set in stone. The FTA will periodically choose the companies that must undergo an audit. FTA retains the right to conduct a thorough audit of the companies. The following are a few of the variables taken into account when choosing a company for a tax audit –
The taxable person in question of the tax audit will receive notice from the FTA five business days in advance. Nonetheless, no notification of a tax audit will be provided in some circumstances, such as suspected tax evasion or if there is cause to think that informing will interfere with the auditor’s ability to proceed.
Not all VAT-registered businesses will be subject to audits, and the frequency of tax audits is not set in stone. The FTA will periodically choose the companies that must undergo an audit. FTA retains the right to conduct a thorough audit of the companies.
The following are a few of the variables taken into account when choosing a company for a tax audit –
The taxable person in question of the tax audit will receive notice from the FTA five business days in advance. Nonetheless, no notification of a tax audit will be provided in some circumstances, such as suspected tax evasion or if there is cause to think that informing will interfere with the auditor’s ability to proceed.
The FTA authorities will examine the returns and other information. An audit of a corporation by the FTA is not required to have a defined purpose. They are free to conduct it whenever they choose and for whatever reason. The company will receive notice five days before the planned audit date.
The notice will include information about the audit schedule, location, parties participating, and any specific reasons. The process will start when the company and the auditor(s) meet at the designated location at the designated time. The auditors in the UAE have the right to request copies or original business records, as well as samples of products and other assets on hand.
Note: To ascertain the tax auditors’ authority, the audited party is entitled to request their credentials, such as professional identification cards.
Unless the Director-General chooses to audit a business after regular business hours in an extraordinary circumstance, the tax audit must be carried out during the official FTA working hours. The company that is the subject of a tax audit, with its tax agents and legal counsel, must give the auditors everything they need to complete their job. The authority may request a second audit for additional investigation if the audit’s findings reveal anything questionable that could affect the tax return.
The person being audited has the right to request a copy of the notification and any relevant documentation and attend auditing operations outside of designated locations.
The FTA authorities will examine the returns and other information. An audit of a corporation by the FTA is not required to have a defined purpose. They are free to conduct it whenever they choose and for whatever reason. The company will receive notice five days before the planned audit date.
The notice will include information about the audit schedule, location, parties participating, and any specific reasons. The process will start when the company and the auditor(s) meet at the designated location at the designated time. The auditors in the UAE have the right to request copies or original business records, as well as samples of products and other assets on hand.
Note: To ascertain the tax auditors’ authority, the audited party is entitled to request their credentials, such as professional identification cards.
Unless the Director-General chooses to audit a business after regular business hours in an extraordinary circumstance, the tax audit must be carried out during the official FTA working hours. The company that is the subject of a tax audit, with its tax agents and legal counsel, must give the auditors everything they need to complete their job. The authority may request a second audit for additional investigation if the audit’s findings reveal anything questionable that could affect the tax return.
The person being audited has the right to request a copy of the notification and any relevant documentation and attend auditing operations outside of designated locations.
After the audit, the taxable person will receive a report from the FTA. A tax assessment will be made if the auditor’s conclusion results in the identification of any of the following situations –
It is anticipated that most VAT-registered firms will eventually be the target of an audit. Penalties and reputational damage are possible outcomes of breaking tax regulations. Before the actual audit, a preliminary internal tax examination by VAT specialists guarantees that an organization is –
It is advised that such a review be carried out at least once a year to ensure the company is compatible with changing tax laws and other statutes. Maintaining proper record keeping and retention of documents and filing its VAT returns in a timely and compliant way.
Businesses in the UAE must reduce their exposure to FTA fines and penalties. A VAT audit review is required if the Federal Tax Authority of the United Arab Emirates issues a tax assessment. Being a Federal Tax Authority of the United Arab Emirates-approved tax firm, Rewind Consultancy can assist your company with a VAT audit review. Our Tax Agent can represent your company and ensure a seamless FTA Tax Audit procedure.
We assist you in locating any flaws, omissions, and inaccuracies in your VAT returns. Additionally, the assessment will ensure that none of your clients have VAT-related problems that could harm your commercial partnerships.
Businesses in the UAE must reduce their exposure to FTA fines and penalties. A VAT audit review is required if the Federal Tax Authority of the United Arab Emirates issues a tax assessment. Being a Federal Tax Authority of the United Arab Emirates-approved tax firm, Rewind Consultancy can assist your company with a VAT audit review. Our Tax Agent can represent your company and ensure a seamless FTA Tax Audit procedure.
We assist you in locating any flaws, omissions, and inaccuracies in your VAT returns. Additionally, the assessment will ensure that none of your clients have VAT-related problems that could harm your commercial partnerships.
The location of the taxable person’s business, or occasionally the FTA office, is the site of the tax audit. The audit will typically occur during the FTA’s regular business hours if it occurs at the taxable person’s place of business.
Maintaining accurate and current financial records, ensuring tax rules and regulations are followed, and being prepared to supply any documents the tax authorities seek are all crucial steps in preparing for a tax audit.
Generally speaking, records from a tax audit may include financial statements, bank statements, contracts, invoices, receipts, and any other pertinent paperwork.
If a taxpayer feels there are mistakes or disagrees with the audit’s conclusions, they have the right to appeal the results. Providing reasons in support of your case and submitting more documentation are standard steps in the appeals process.
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