A corporate tax audit is a required procedure in the UAE for reviewing a company’s financial records, tax records, and tax compliance. To find any discrepancies or mistakes throughout the process, an auditor analyses the financial accounts, tax returns, and other documents.
Corporate tax audits are conducted and submitted to the government for the governing body to assess if a taxable organization is abiding by the corporate tax legislation and regulations as per Federal Tax Authority rules. All businesses are required to follow the Corporate Tax Law and Audit processes.
Who needs a corporate tax audit?
Financial statements must be prepared by tax-paying individuals using International Financial Reporting Standards. If a taxable person makes more than AED 50 million in revenue during a given tax period or if they are considered a QFZP, their financial records must be audited.
Procedure of Corporate Tax Audit in the UAE
Step 1
The FTA authorities will review the company’s corporate tax returns and other documents without specific justification.
Step 2
To begin the audit process, the auditor(s) will meet with the firm at the designated location and time.
Step 3
During the corporate tax audit, the auditor may ask for originals or copies of business records and take samples of the products and other on-site assets.
The party being audited has the right to inquire about the credentials of the tax auditor, such as their identity cards as experts, in order to confirm their reliability.
Step 4
If anything unusual is found during the audit that could have an impact on the tax return, the authority may order a re-audit.
The subject of the audit has the right to request a duplicate of the notification and any relevant documentation and to be present during any auditing processes conducted away from the official places.
Benefits from Corporate Tax Audit in UAE
The following are the main benefits of corporate tax auditing:
- An audit enhances a company’s reputation.
- For tax purposes, government authorities recognize audited statements as genuine and fair.
- Auditing is significant for identifying problems with an organization’s accounting processes and making suggestions for changes.
- Additionally, an audit provides confidence that the business is functioning in compliance with the information it is getting to directors who are not involved in day-to-day accounting activities. This could make it harder for fraud and dishonest accounting practices to succeed.
- Giving suggestions that can really improve a business’s financial situation is also made simpler by an audit. This includes opinions about how the business is run, projected margins, and strategies for reaching them. The suggestions cover anything from enhancing internal controls to reducing the possibility of fraud or tax planning.
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