TAX/VAT Audit in UAE. What You Need to Know?

January 24, 2021Dated:  | |
Federal Tax Authority (FTA) has introduced the audit process for VAT in UAE to guarantee that the taxpayers are in compliance with the VAT laws established by UAE govt. As indicated by the Federal Law No. (7) of 2017 on Tax Procedures, issued by the Ministry of Finance the Tax Audit is characterized as a procedure undertaken by the Authority to inspect the commercial records or any information or data related to a Person conducting Business.. The FTA will assess whether every liabilities are paid and every tax due is paid to govt. within the time frame as issued by the govt. The Authority may perform the Tax Audit at its office or the place of business of the Person subject to the Tax Audit or any other place where such Person conducts Business, stores goods or keeps records. A notification will be issued to the organization, at least five days before the planned audit date. The notification will contain details, such as the audit schedule, place, involved parties, reason (if anything particular), etcA Tax Audit will be directed during the official working hours of the Authority. In instances of need, a Tax Audit might be especially led outside of these occasions by a choice of the Director-General.

TAX  AUDITORS

The Tax Auditor may obtain the original records or copies thereof, or take samples of the stock, equipment or other assets from the place at which the Person subject to the Tax Audit conducts his business or which are in his possession, or may seize them in accordance with the rules that shall be specified in the Executive Regulation of this Law.The Tax Auditor has the right of entry to any place where the Person subject to the Tax Audit conducts his Business, stores goods, or keeps records, and as the case may be, it will be temporarily closed in order to perform the Tax Audit for a period not exceeding 72 hours without prior notice in any of the following cases:
  1. If the Authority has serious grounds to believe that the Person subject to the Tax Audit is participating or involved in Tax Evasion in respect to this Person or another Person;
  2. If the Authority has serious grounds to believe that not temporarily closing the place where the Tax Audit is conducted will hinder the conduct of the Tax Audit;

RECORDS TO BE MAINTAINED

As per Article (78) of Federal Decree Law, the Taxable Person should keep the following records:
  • Records of all supplies and Imports of Goods and Services.
  • All Tax Invoices and alternative documents related to receiving Goods or Services.
  • All Tax Credit Notes and alternative documents received.
  • All Tax Invoices and alternative documents issued.
  • All Tax Credit Notes and alternative documents issued.
  • Records of Goods and Services that have been disposed of or used for matters not related to Business, showing Taxes paid for the same.
  • Records of Goods and Services purchased and for which the Input Tax was not deducted.
  • Records of exported Goods and Services.
  • Records of adjustments or corrections made to accounts or Tax Invoices.
  • Records of any Taxable Supplies made or received in accordance with Clause (3) of Article 48 of this Decree-Law, including any declarations provided or received in respect of those Taxable Supplies.
  • Records of Details of Goods imported to the state along with Customs declarations and Supplier Invoices.
The list just contains a few of the records that need to be prepared for a VAT Audit. The FTA may moreover demand more records to be sent for the review.

HOW CAN FLYINGCOLOUR HELP YOU?

It is significant for all the organizations registered in UAE to comply to the UAE VAT laws and guidelines issued by Federal Tax Authority, a definitive constitution approved and answerable for collection and management of federal taxes. Each business enlisted in UAE must get ready for VAT review and guarantee that there is no irregularity in any records. It is significant for organizations to have TAX review audit, as non compliance of various laws and regulations issued by ministry of finance levy severe penalties.We offer help and direction to the enrolled people and organizations in UAE with the assistance of our accomplished and expert VAT consultants. As your TAX consultants, we advise you in every VAT compliance requirement and analyze the impact of VAT in your business. We add to your development by guaranteeing customized bookkeeping and utilizing innovation to improve compliance quality while reducing your expense.The blog post is written by Ms Prajitha, Tax Advisor at Flyingcolour Accounting & Tax Services. If you have any query related to VAT audit in UAE then feel free to call +971 4 4542366 today for a quality consultation or please send inquiry to info[at]flyingcolour[dot]com.Please Note: This article was published on 24th January, 2021. The information provided in the article is based on the policies and rules applicable at the time of writing it. Talk to one of our consultants for any recent update or change.
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