Why VAT Audit is Required?
VAT is the self assessment tax by the taxable person. FTA accepts any amount reported by Taxable Person and assumes that the reported figures are correct, to check the validity of these reports FTA will come up with VAT Audit. Generally the Taxable person by filing the VAT return assumes that this is the last step of VAT Compliance, but from the FTA point of view this is the first step for them, on the basis of VAT returns FTA issues VAT Audit intimation. FTA issues notices to the taxable person for VAT Audit with specified deadline to intimate them for ready with all the reports and documents, and the date when the Audit will start.
The taxable person have the opportunity to find out error in their filled returns and present to FTA through Voluntarily Disclosure as per the Federal Law No.(7) of 2017 on Tax Procedures. To file Voluntarily Disclosure is always prove favorable to the Taxable person as Penalties and fines for the errors finds during the Audit is quite hefty. If The Authority selects a VAT return filled by taxable person to be subject to a review, then the taxable person may be contacted and asked:- To explain any aspect of a document or tax return submitted by it. To provide evidence to prove the correctness of its VAT return, which may include certain tax invoices or relevant business records such as contracts or bank statements or accounts receivable and accounts payable or VAT accounts.
The Authority have the power to raise an assessment on the based of any relevant information provided by the taxable person or third party. Tax advisors in Dubai helps businesses to prepare for Audit and for that purpose many consultants providing 360 Degree health check of VAT to their clients.
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Before Starting the Audit Process Companies must be aware of