By Innovation-SA on July 20, 2020 in Business
Simply put, a tax audit is an examination of the liability of a company conducted by the FTA. Through this audit, they determine whether companies have paid their value-added taxes within the due date. Additionally, the auditor monitors and makes certain that businesses are fulfilling the specific responsibilities applied to them as per the UAE’s tax laws.
Details of The Procedure
Ideally, the Federal Tax Authorities can carry out a tax audit at any time and issue a notice five days prior to the scheduled date. Now, you may be wondering what does the notice entail? It includes details of the audit date, the location, parties involved, and any other specific requirements. The auditor meets the company’s representative with all the appropriate documentation, as per the scheduled date and location listed on the notice. The procedure starts with you having to submit all the business documents requested, and they may even ask for samples of any items that might be available at the time.
It is worth noting that you are legally permitted to ask the auditor for any identification proof, so you are assured of working with a legit tax auditor.
Ideally, a tax audit is carried out during the authority’s official working hours. It is vital for the company, its legal representative and tax agent, to offer full cooperation during the process. If anything appears to be suspicious, the auditor will then schedule a re-audit to evaluate it further. If the review is conducted outside the official location, you, as a company has the right to ask for a notification copy and related documents as well as be present during the audit process.
Documents Required by The Tax Auditor
Once you have received a notification of an audit that is to be conducted of your organization, it would help if you kept the required documents ready. It ensures a smooth and swift process. Below we mention the various paperwork required.
- Records of the company’s present inventory – tax and receipt invoices
- All tax invoices, tax credit notes, and alternative documents which have either been issued or received by your company
- A full record of all goods and services disposed of, exported or used in the company
- Customs declaration and suppliers’ invoices
- The accounts book
Tips to Stay Prepared for The Audit
VAT Input and VAT Output Review
Every organization needs to ensure they are meeting the laws of UAE by checking the calculations of their tax input and output. These need to be conducted thoroughly and with precision, with experts evaluating them as well. The treatment will vary for zero-rated products and services, and records will have to be retained to offer adequate evidence.
Given the announcement and implementation of VAT, companies have then started making varied amendments to work following this new rule. It is essential to revise the bookkeeping process, while also bearing in mind to be at par with the local VAT accounting regulations. With a system review in place, companies are assured of no ambiguity while recording any transactions.
Tax Dues Review
It is vital to clear any dues to the Federal Tax Authority either prior to the due date or on the day it’s due. The regulated tax consultant will see to it that you don’t attract any scrutiny from payments owed by you.
VAT Return Review
An analysis will be conducted by the tax consultant on the VAT returns that need to be documented. It is an assurance that returns are appropriately recorded, figures are in the right location, and that complete and relevant details are provided.