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Excise Stock Audit

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Excise Stock Audit In UAE

The Excise Duty Act entered into force on 1 October 2017 pursuant to Federal Decree-Law No. (7) Of 2017. It is an indirect tax levied on certain excisable goods manufactured, produced, and stored in the United Arab Emirates. The supervisory authorities will verify the adequacy of the excise duty records of each taxable entity through tax audits or inspections. Therefore, small and medium-sized enterprises should take care to comply with the stock record-keeping requirements of the Excise Duty Law.

In order to manage inventories effectively, business owners always prefer to audit excise inventories in the UAE.  This is the best way to ensure the accuracy of the tax records of the physical stock of the company.

What does a stock audit mean?

A stock audit is carried out to check the physical stock available in a warehouse against the stock recorded in the books of account and to find similarities or discrepancies. It is carried out to verify the quantity and condition of goods held in stock in the factory. This helps to monitor and protect stock, which is the company’s biggest asset. The audit of excise stocks can also reduce the risk of theft, damage, stock expiry, and product end-of-life.

Why is an excise audit so important in the Emirates?

Stock audits are essential for companies dealing with excisable goods in any emirate of the UAE. This is because inventories are key assets of an organization and have a direct impact on the profit and loss accounts. Any ambiguities or miscalculations in the inventory records lead the company to losses. In addition, the FTA may impose severe penalties for failure to maintain stock records in accordance with regulatory requirements.

Therefore, the company must keep accurate stock or inventory records. You can hire our tax consultants for any excise services in Dubai, Sharjah, Abu Dhabi, and other Emirates, which will protect your company’s account from potential risks and penalties.

Legislation relating to inventory management in the UAE

According to Article 24 of Federal Decree-Law No. (7), every taxable company in the UAE is required to keep records of all excisable goods produced, imported, exported, and accumulated, as well as stock levels and records of damaged goods.

Stock/Inventory Audit Checklist

When auditing excise duty stocks in the UAE, the taxpayer should take note of the following checklist to ensure that the records are in order:

  • Accounting and reconciliation of stocks in accordance with excise duty laws
  • Comply with the latest FTA stock reporting requirements.
  • Correct valuation and valuation of stored stocks
  • Proper maintenance of stocks or inventories
  • Accurate coding and insurance of stocks
  • Evaluate the software used to keep stock records
  • Classification of stock into low, medium, and high value
  • Content and formats of stock-related MIS

Purpose of the excise inventory control

The audit of excise inventories is also known as stock verification in the UAE and its main purpose is to monitor the compliance of inventory records with tax laws. It ensures the accuracy, existence, and value of stocks held in the company’s warehouses or factories. It is ideal for developing stock management strategies, for example, to identify surplus or shortages of stock according to their lead time. Inventory verification will therefore help individuals and businesses to monitor their stocks and make a profit. Some other objectives of stock verification are mentioned below:

  • Significantly assist in the financial audit of the FTA
  • Detect discrepancies in actual stocks
  • To determine the quantity of lost or damaged stock
  • Quantifying stock that is out of circulation or overstocked

Why do companies hire external auditors to audit excise stocks?

The Federal Tax Authority requires stock audit reports during the financial records check. Excise stock reports must also be prepared by authorized and certified tax auditors. For this reason, conducting an excise stock audit in the UAE requires expertise and adequate knowledge of tax laws and resources. In order to track the entry and exit of excisable goods, the operator must hire third-party external auditors to audit the stocks in accordance with FTA standards. The auditors can assess the accuracy of the physical stock with transitional stock. They also assist in the preparation of the excise stock report in accordance with the FTA’s new excise stockholding requirements.

How does BestaxCA help you?

BestaxCA is affiliated with the leading national audit firm in the United Arab Emirates. Our team brings together highly qualified and certified specialists and auditors to offer you the best excise compliance and advisory services. The auditor will delve into your accounting records and inform you of any missing areas or inaccuracies in regulatory requirements to avoid penalties. They assess and verify all stock together with a reconciliation of existing stock records. Don’t waste time and contact our highly qualified consultants and auditors in Dubai today!

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