Guide to tax audits in the UAE

Guide to tax audits in the UAE - Makebiz

When doing business in the UAE, it pays to be particularly diligent about record keeping and tax compliance in order to successfully pass audits. Among the main taxes to consider are corporate and excise tax, as well as VAT.

Audits of companies are conducted annually by the Federal Tax Administration, consist of several stages and are aimed at compliance. The process begins with sending the firm an audit notice, which specifies the objectives, deadlines and required documentation. During on-site visits, the Department’s employees have the right to interview staff and check the company’s assets.

The key stage is to analyze the taxpayer’s data to identify inconsistencies or errors in record keeping. Here may require an immediate reaction of the founder — correcting errors or providing explanations and evidence of innocence in the violation. Based on the results of the audit, the company is provided with an audit report with conclusions, recommendations or penalties. 

VAT audits can be conducted remotely or on-site. To begin with, the Authority’s staff requests a list of transactions, various financial reconciliations, sample documents for various transactions and financial statements. Finding violations also carries penalties.

A meeting will be scheduled for a corporate tax audit where tax returns, original and copies of business documents will be useful. If discrepancies are found, a re-audit may be scheduled. It should be borne in mind that the company has the right to request the auditor to obtain a certificate authorizing professional activity in this field. 

Regular audits make it possible to identify errors in the maintenance of documentation in good time, and the tax authorities’ recommendations will help to strengthen internal control and ensure a stable financial position of the company.

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