Tax Audit in the UAE
According to Federal Decree-Law 7 of the Tax Procedures Law, every taxable company is required to prepare financial records for an FTA tax audit. The relevant authorities shall ensure that the company complies with the UAE tax audit laws. The FTA’s official representatives examine the books and records and the financial statements. This is the reason why taxpayers outsource tax audit services in the UAE to determine the correctness of their tax liabilities. In addition, the FTA ensures that other tax obligations are met within the stipulated timeframe. Below we will discuss in more detail the type, procedure, and essential requirements of UAE tax audits for companies:
Value Added Tax Audit in the UAE
VAT is an indirect tax imposed by the regulatory authorities on certain products and services. Under the UAE VAT laws, auditors are required to verify the correctness of VAT registrations, VAT invoices, VAT returns, and refunds. The taxable person submits a VAT Compliance Report in accordance with the rules of the Federal Tax Authority (FTA). When conducting a VAT audit in the UAE, the company must ensure that it collects and reports VAT within the prescribed time limits and complies with the VAT laws.
Excise duty is the other major type of tax in the UAE, mainly levied on harmful products to discourage their consumption or use. To ensure that your company has submitted accurate excise duty payments during the reporting period, you can seek assistance from an expert audit firm in the UAE before conducting a formal FTA audit.
How does the FTA Carry out a Tax Audit in the UAE?
The UAE requires all registered companies to be VAT compliant before the FTA audits their financial records. Depending on the Tax Procedure Law, the FTA has the right to conduct a tax audit of any company at any time. The FTA does not need a specific reason to carry out an audit. Tax audits in the UAE take place at the offices of the company concerned or at the option of the Federal Tax Authority (FTA). In accordance with Article 19 of the Tax Procedure Law, audits are carried out during official working hours and the authorities inform the companies at least 5 days before the actual audit. The notice of the audit contains information such as the time, place, parties involved, specific reasons, etc.
When conducting a tax audit in the UAE, official FTA auditors assess your tax liabilities and other tax-related information. The company’s tax agents and legal representatives can also assist the FTA tax auditors. The authorities have the right to re-audit a company if they find fraud, irregularities, and suspicious activity in financial records. To ensure compliance, companies can seek advice from certified tax advisers and chartered accountants in Dubai.
Keeping Records for UAE Tax Audits
- FTA auditors may request certain records and documents (originals/copies) from authorized employees of the company. This may include the following information:-
- Records of all supplies and imports
- Tax invoices and other documents relating to the receipt of goods and services
- All tax credit documents received.
- All tax invoices and documents issued.
- Goods and services purchased without deduction of input tax.
- Details of goods and services exported.
- Accurate records of adjustments or corrections made to the accounts or tax invoices.
- Invoices for imported goods together with customs declarations.
Preparation for Tax Audit in Dubai, UAE
When the FTA decides to audit your company, a tax consultant can always help you prepare in advance. They will prepare all your documents and reports to comply with UAE VAT laws. Tax consultants can help you in the following ways:
1- System Assessment
When companies are preparing for a tax audit in the UAE, tax consultants need to check their accounting system to ensure accuracy. They analyze in depth whether each department has the latest and most up-to-date accounting software to maintain data in the formats required by the FTA. Our team makes sure that every financial record and transaction complies with national legislation. System reviews will ensure that recorded transactions are consistent and correct.
2 – Reviewing Tax Calculations
Tax assessment is required when companies prepare accounts for VAT audits in the UAE. To ensure compliance with UAE VAT laws, tax consultants will ensure that the company accurately calculates both input and output taxes. In addition, they assist in the preparation of documentation for standard and zero-rated supplies of goods and services.
3 – Reviewing Tax Payments
It is necessary to pay the correct amount of tax due. A tax advisor will make sure that you pay your taxes to the government without missing the due date.
How does BestaxCA help you with Tax Audit Services in Dubai?
BestaxCA is one of the most prominent accounting and audit firms in the UAE. With over 15 years of experience, our chartered accountants provide financial advisory services in almost all major industries. We help you to provide the best VAT audit services in Dubai, United Arab Emirates. Our tax auditors fully assist you before and after the audit to ensure compliance with VAT audit laws. They make sure that all tax-related information and accounting records are in compliance with FTA laws and regulations.