Tax Audit in the UAE
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In order to determine the accuracy of the VAT liability of a taxpayer, a tax audit reviews several documents held by the taxpayer. A tax audit examines the duties of taxable entities and whether their responsibilities are being fulfilled in compliance with tax laws.
The Federal Tax Authority (FTA) is responsible for conducting the taxable entity's annual tax audit to ensure all liabilities are charged, collected, and turned over to the government within the specified timeline. As a result, the taxpayer will receive an audit notice in advance.
The Tax Audit's Preparation
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Seek Assistance from your Tax Consultants
To ensure that the company will be ready to check the tax audit. A tax consultant can assist all the companies in setting up and similarly preparing all the documents needed for the tax assessment.
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Organize your records
Ensure all the necessary documents, which will eventually be requested to present during the assessment, are ready. Remember that poor records may result in penalties.
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Prepare the following
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Review of the system
Make sure that the accounting software is up-to-date and should be compatible with the requirements set by the Federal Tax Authority.
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Review of Calculation of Tax
The calculation of the company's output and input taxes shall comply with the laws set by the UAE – the rule states that the tax rate is at 5% only.
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Review of VAT Returns
The tax consultant shall adequately check the returns, guaranteeing that all the values are appropriately recorded, and all the information is included.
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Review of the Payment of Tax Due
All tax payments must be paid accurately on or before their due date.
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Review of the system
The Penalties Correlated to Tax Audit in the UAE
Noncompliance with tax laws will probably result in penalties. The Ministry of Finance (MOF) has issued a set of disadvantages to those guilty of non-compliance. The following are as follows:
- Non-maintenance of financial records – AED 10,000
- Submission of an incorrect tax return by the Registrant – AED 3,000
- Repetition of submitting false tax return – AED 5,000
- Failure of the person conducting business to support the work of a Tax Auditor – AED 20,000
- Failure of the taxable person to submit a registration application within the time frame specified in the tax law – AED 20,000
These violations of tax laws can also lead to imprisonment of the authorized signatory and can be considered a criminal offense.
What are the Records to Be Maintained for A Tax Audit?
A tax consultant can help you to be always organized so that when your company is requested for an audit from FTA, you are all set up to face the tax audit that people seem to be worried about. To know about the detailed procedure on how the records are maintained, contact AMCA.
How Can AMCA Help You?
As one of the leading auditing firms in Dubai , AMCA has a long history of providing the best audit services to our clients. Our clients' accounting and auditing needs are met by a team of trained and experienced professionals.
The skilled professionals at our firm have extensive experience across a variety of industries in a wide range of countries.
In our service delivery, we take the unusual approach of placing the client's needs at the center of our efforts. There is no doubt that our most valuable asset is the unmatched talent of our expert team. As part of our auditing services in the UAE, our top auditors in Dubai, UAE, are equipped with advanced tools and have extensive experience in any form of auditing service.
With decades of experience, our experts here at AMCA are well-qualified to handle your project. To schedule a consultation with our team, please give us a call today.
Frequently Asked Questions
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What is the purpose of an audit report?
An audit report provides an opinion on financial statements' accuracy, completeness, and fairness, which helps stakeholders make informed decisions.
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What do auditors do?
Auditors Provide an opinion whether the subject matter presents a true and fair view as per accepted legal standards, using substantive audit procedures.
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What Is Tax Audit In UAE?
A tax audit is an evaluation conducted by the government to determine a company's compliance as a taxable entity. The primary objective of such an audit, conducted by the FTA, is to ensure that all tax liabilities are settled within the specified timeframe and that all taxes due are remitted to the government. Additionally, the government also assesses whether a company adheres to the various responsibilities stipulated by tax laws, such as the VAT Law and Excise Tax Law, that apply to their business operations.