VAT audit services
From 1 January 2018, the United Arab Emirates introduced VAT at all stages of the supply chain. The Federal Tax Administration (FTA) has made VAT compliance mandatory, otherwise, taxable persons are penalized. The authorities may at any time notify a VAT inspection of your financial records and transactions. We are here to provide you with our expert VAT audit services in Dubai that will critically assess your tax collection, payments, and VAT compliance. Before the auditors check the accuracy of your tax processing, our staff checks for general system deficiencies in accordance with FTA guidelines and helps you make the necessary corrections to avoid hefty penalties during the FTA audit.
What is a VAT audit?
A VAT audit in the UAE means a formal examination of tax records and accounting documents by the Federal Tax Authority. This is how tax auditors identify VAT discrepancies under the UAE tax laws. The main objective of these VAT audits is to increase financial stability and fair taxation in the UAE.
Who carries out VAT audits in the UAE?
According to the Tax Procedures Law, VAT/tax audits are carried out exclusively by the UAE’s official regulatory agency, called the Federal Tax Authority (FTA). According to the Federal Law, enacted by Decree No. 13 of 2016, this authority is responsible for verifying and collecting taxes within a set timeframe. If a taxable company fails to comply with VAT laws, the authority imposes heavy fines and penalties.
VAT pre-verification is as important as VAT registration, VAT refunds or returns, and other VAT compliance activities. It is a proactive approach for small and large businesses to avoid unexpected fines and penalties. A tax audit in the UAE determines whether a taxpayer is complying with VAT laws and regulations. This assessment is better carried out before a company is rescued from VAT non-compliance. A pre-audit health check examines all tax-related documents and records and informs the organization of any loopholes in the current system. Our accountants and VAT experts in Dubai advise you on the best tax policies, strategies, and procedures in line with FTA standards.
How does the FTA select a company for a VAT audit in the UAE?
There are no suitable criteria for selecting a company for a VAT audit in Dubai, Abu Dhabi, and other emirates. There is no requirement for the Federal Tax Authority to audit all taxable entities. The time, place, or frequency of the audit is not specified. It is entirely up to the relevant authorities when they select a company for a formal tax audit. The following are some of the factors to be taken into account when selecting any target for an audit.
- Whether the company is large or complex
- The company’s history of previous compliance activities
- Late filing of returns is common.
- Errors and inaccuracies in the submission of VAT returns, etc.
FTA VAT audit procedure in the UAE
According to the Tax Procedures Law, the official regulatory FTA in the UAE is responsible for conducting the tax audit. The authorities inform the registered company at least five days before the audit. VAT audits in Dubai are mostly carried out on working days for any reason. The authorities determine the location of the audit, and the sample of goods, and request original or copies of documents. When conducting a tax audit in the UAE, FTA tax auditors examine tax returns and other related information.
The presence of tax agents and legal representatives is recommended to assist FTA VAT auditors. If the auditors find deficiencies or irregularities in the documentation, they have the right to re-audit the taxable company at any time. To protect your business from VAT non-compliance and penalties, you can seek help from BestaxCA-certified tax advisors. Our related VAT audit services in Dubai fully assist businesses before and during an audit by the relevant authorities.
- Information you need for a VAT audit in Dubai
- Records of goods supplied and imported
- Tax credit notes and invoices received and issued
- Valid information on exported goods and services
- Purchases of goods and services without deduction of input tax
- Adjustments or corrections to tax invoices, whether records are maintained accurately.
- Customs declarations and invoices from suppliers of goods imported into the country
- Detailed records of fixed assets or property, plant, and equipment purchased and the amount of input tax claimed
Penalties for tax evasion under the FTA
The FTA will impose heavy fines on individuals and legal entities involved in illegal tax evasion activities. The list of penalties is set out below:
- Failure to keep financial records will result in a fine of AED 10 000 for the first offense and AED 20 000 for repeated offenses.
- If a person fails to facilitate the work of the tax auditor, a fine of AED 20 000 will be imposed.
- Violation of UAE tax laws may result in the closure of the company and cancellation of the trading license.
- The penalty for filing an incorrect tax return for the first time is AED 1 000 and AED 3 000 for repeated filing.
- If a taxpayer fails to submit a VAT registration application within the time limit set by the tax law, a charge of AED 10 000 is levied.
How does BestaxCA carry out the pre-test assessment?
BestaxCA’s chartered accountants and tax advisors in Dubai help businesses comply with VAT laws in accordance with UAE legislation. Our dedicated team guarantees 100% results and promises to prevent penalties. We offer reliable VAT audit services in Dubai for local and international clients. We understand the importance of VAT audits for taxable entities. Our tax consultants take a number of things into consideration when reviewing your financial records. During the pre-inspection assessment, we will check:
- Checking tax invoices
- We will check your general ledger, trial balance, etc.
- We will check the reconciliation of custom entries
- Assessing VAT returns
- Carefully consider the deadlines set by the FTA
- Cross-checking VAT-related accounts
- Update your records in accordance with UAE VAT laws
- Check the correctness of input and output tax
- Implement appropriate accounting software
- Assist you in submitting the final audit report
- Recommend new tax policies and strategies
Hurry up and choose top-notch VAT audit services in Dubai, UAE, for tax-registered companies. Just contact and we will be happy to assist you on a more personal basis.