The Tax Procedures Law (Federal Decree-Law 7) defines a tax audit as a procedure carried out by the Federal Tax Authority to examine commercial documents or any information or data relating to a person carrying on a business. Tax audits in the UAE are conducted by the FTA to enable the government to assess whether a taxpayer is complying with tax laws and requirements under the VAT Laws and the Excise Tax Laws. In a tax audit, the FTA verifies that taxpayers have paid all liabilities and that all taxes due have been collected and remitted to the government within the prescribed time limits. According to Article 17 of the Tax Procedure Law, the FTA may conduct a tax audit at its office or at the taxpayer’s business premises or at any place where the person carries on a business (places where the entity keeps records or stores goods).
A MORE DETAILED LOOK AT THE FTA’S TAX AUDIT PROCEDURE
During a tax audit, the FTA authorities examine tax returns and other information and no specific reason is required for the FTA to audit a taxpayer. The FTA is allowed to conduct a tax audit in the UAE for any reason or at any time. However, the FTA will send a notice to the company at least five days before the date on which the tax audit is scheduled to take place (in accordance with Article 17 of the Tax Procedures Law). In normal circumstances, the tax audit will take place during FTA working hours (in accordance with Article 19 of the Tax Procedures Law). However, the Director-General of the FTA has the right to conduct a UAE tax audit outside working hours if it is an exceptional case. The company, its legal representatives, and tax agents must provide all assistance to the FTA officials conducting the audit. Auditors may request a re-audit if they report a suspicious fact during the audit.
HOW TO PREPARE FOR A UAE TAX AUDIT?
Tax consultants in Dubai can help companies prepare when the FTA requests a tax audit. Following the guidance of professional advisors will boost the confidence of companies to face a UAE tax audit. The following are some of the most important tips on how to prepare for a company tax audit in the UAE.
REVIEW THE SYSTEM
As tax auditors review all tax-related transactions, companies need to ensure that there are no discrepancies in any documentation. With the help of BestaxCA’s experienced team of tax consultants in Dubai, UAE, companies can review their systems to ensure that transactions are recorded correctly. Companies need to ensure that their accounting software is compliant with VAT accounting requirements.
REVIEWING TAX CALCULATIONS
Companies should pay attention to both input and output tax calculations to ensure that they comply with UAE VAT laws. The standard rate of tax in the UAE is only 5% and many goods or services that are zero-rated or exempt from VAT should be treated as such with sufficient documentary support. Consult BESTAXCA to make sure you are on the right side of the UAE VAT laws.
REVIEWING VAT RETURNS
Businesses registered for VAT are required to submit their VAT returns online via the FTA portal. Filing a VAT return involves submitting online the values of sales VAT, input VAT, output VAT, input tax, etc. in the relevant fields of the VAT return form on the FTA portal. With the help of the best VAT consultants in Dubai, businesses can ensure that returns are filed correctly. BestaxCA can help businesses enter the values in the correct boxes and the required information is submitted to the FTA within the deadline.
Bestaxca can help you with compliance and vat returns in the UAE. Contact us for a consultation.
WHAT ARE THE RECORDS THAT NEED TO BE KEPT FOR A TAX AUDIT?
Article 78 of the Federal Decree-Law requires the registrant to keep the following records, which are available to the FTA upon request:
- Records of all supplies and imports
- Tax invoices and documents relating to the receipt of goods and services.
- All tax stamps and documents received
- All tax invoices and documents issued
- Records of disposals of non-business goods and services and records evidencing the tax paid on them
- Records of goods and services purchased on which input tax was not deducted
- Accounting for exported goods and services
- Records of adjustments or corrections made to accounting or tax invoices
- Details of imported goods together with customs declarations and suppliers’ invoices
The list is not exhaustive, but FTA may request further documents. Consult BESTAXCA in Dubai to prepare documents in accordance with tax laws.