FTA VAT Audit Services in Dubai | VAT Audit in UAE | VAT audit in Dubai
What is Value Added Tax (VAT)?
VAT or Value Added Tax UAE is a consumption-based tax that is to be implemented from 1st January 2018 in the UAE. Announced through the Federal Decree – Law no. (8) of 2017 by the Ministry of Finance of UAE, the new VAT regulations state the implementation of a tax on goods and services for businesses and end consumers alike, with exemptions on a few goods and services. It is to be imposed on the supply and import of goods and services at each stage of distributions as well as production. The Executive Regulation accompanying the Federal Decree – Law no. (8) states the VAT law in detail and is now open for all to view online.
All UAE companies, first and foremost, are recommended to get taxation papers audited by approved tax agents in Dubai, UAE, who will exactly determine their tax compliance and pay their taxes as per the regulations led down by the Federal Tax Authority. Around 90% of the VAT registrants pay their taxes in this tax year. Therefore there is a huge hurry for VAT audit in UAE by the end of the tax year. Tax year is a 12 month period covered by tax returns, which could be monthly or can also be quarterly as specified by FTA during registration. So as we are to learn how to prepare for VAT Audit in UAE, we should get familiarized with taxation terminology, even if you are planning get work done by internal auditors or by any Tax consultant in Dubai.
What is VAT/Tax Audit in Dubai, UAE?
It is basically a formal examination by approved Tax Agents of the company’s VAT Ledgers, Sales and Purchases Ledgers Trial balance reconciliation with standard rated sales. Zero rated sales, Out of scope and Exempt Sales and physical inspection of Purchase Tax Invoices and Sales Tax invoices for the Tax period for e.g. Jan-21 to Mar-21. This ensures that all liabilities are cleared and every tax due is collected and given to the government during the specified time frame.
VAT returns are needed to be filed by companies, must be prepared in the correct manner recorded properly with the right values in the right boxes. Tax Agents in UAE can help you on it and get it done within the specified time limit.
Most importantly, the tax due must be paid and cleared off on or before the specified due date. If you have already employed an approved tax agent, he will ensure entity’s VAT Compliance, as per FTA guidelines (that your dealings are made valid and legitimate and you carry out a safe and clean business.)
Companies are usually worried to tackle Tax audit which can be planned and be well organized if you have a tax consultant to help you on it.
Following can be the outcomes for VAT audit in UAE by approved Tax Agents before FTA audit notification
- Accounting Archiving Report and Accounting Data adjustment report will be issued to the entity’s management with observations and corrective actions.
- If there is need to make adjustments in the tax periods, voluntary disclosures will be prepared and submitted to FTA.
- If VAT impact is below the voluntary disclosure requirement, Adjustment will be done in next tax period.
- Company will VAT compliant as per FTA guidelines and chances for the fines by the FTA will be minimized.
- Company will be well prepared for the FTA Audit.
- Also management can further clarify their doubts regarding VAT filing and FTA guidelines during the audit with approved tax Agents.
What is Federal Tax Authority Audits?
Tax audit or in other words VAT audit, can be conducted whenever the government wishes to examine the company’s records and documents. VAT audit in UAE involves a detailed procedure in which the authorities will check the returns and other details,
Following is the brief procedures for FTA audit procedure
Means of Notification and Correspondence by the Authority.
The Authority shall execute the Notification by any of the following means:
- Registered post
- By electronic mail to the address provided by the Person being notified
- Posting on the premises of the Taxable Person
- Any other means as may be agreed by the Person and the Authority
Right to Conduct Tax Audit
- For the purposes of conducting a Tax Audit, the Authority may inspect:
- The Premises
- The Documents available at the Premises
- The Assets that are available at the Premises
- The accounting systems used by the Person subject to Tax Audit
- For the purposes of implementing provisions of Clause (4) of Article (17) of this Law, the Tax Auditor shall obtain the prior written consent of the Director General, as well as a permit from the Public Prosecutor to be able to enter the part of the Premises where the Premises or parts thereof are used as a dwelling.
- For the purposes of implementing Clause (1) of this Article, the occupational tenant of the Premises, or in the absence of the occupational tenant, any Person the Authority considers as having control over the Premises, shall provide the Authority with all reasonable facilities necessary for the effective exercise of its powers under this Article.
Notice of Audit
- Any notice of a Tax Audit sent by the Authority shall state the possible consequences of obstructing the Tax Auditor in the exercise of his duty.
- Where a Tax Auditor is assigned to carry out a Tax Audit according to Clause (4) of Article (17) of this Law, he shall provide a notice in writing at the beginning of the Tax Audit to the following:
- The occupational tenant of the Premises if he is present at the time of beginning the Tax Audit.
- The Person who appears to be in charge of the Premises if he is present and the occupational tenant is not present.
- In any other case, the notice shall be posted on a prominent place in the Premises.
- Any other official of the Authority whom a Tax Auditor considers necessary for the effective exercise of his powers under this Decision may accompany the Tax Auditor to any Premises.
- A Tax Auditor carrying out a Tax Audit at the Premises of a Person based on a permission of the public prosecutor according to Article (12) of this Decision, shall present the permit issued by the Authority as well as the permit obtained from the public prosecutor, in addition to the proof of identity every time he is requested to do so.
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