This article will give you an overview of circumstances that lead to FTA’s VAT audit in UAE and also few records that need to be prepared and maintained for an tax audit.
Process of FTA VAT Audit
The process of VAT audit in UAE is done by the FTA (Federal Tax Authority) and the main importance or duty of the FTA is to assess the VAT liability and to make sure that the taxable person is following the guidelines of the UAE VAT law or uncover any sort of fraud or inaccurate tax returns.
According to Article 78 of Federal Decree Law it’s mandatory for a taxable person to keep these records as listed below and to be presented to FTA when asked:
- All Tax Credit Notes and alternative documents issued.
- Records of exported Goods and Services.
- Both tax transactions and alternative records relating to products or services receivables
- Details of Goods imported to the state along with Customs declarations and Supplier Invoices.
- To Business, showing Taxes paid for the same.
- All Tax Credit Notes and alternative documents received.
- Records of adjustments or corrections made to accounts or Tax Invoices.
- All Tax Invoices and alternative documents issued.
- Records of Goods and Services purchased and for which the Input Tax was not deducted.
- Records of all imports of any sort of goods and services or supplies.
- Records of Goods and Services that have been disposed of or used for matters not related
VAT returns are necessary for businesses to file, but it must be prepared correctly and reported with the correct values in the correct boxes. In UAE, tax agencies will help you get it done within the prescribed time-limit.
Moreover, significantly, the tax due on or before the stated due date must be paid and cleared off. If you have already employed an authorized tax officer, he/she will ensure compliance with the VAT of the company according to FTA guidelines.
The circumstances due to which FTA’s VAT audit in UAE occurs is if you don’t:
Tax Returns : If there has been incorrect tax returns for eg if the tax amount was wrongly charged that could affect the overall tax returns amount.
Tax Evasion: If there’s a taxable income that has not been disclosed or the payable tax amount is intentionally reduced by the taxable person.
VAT Registration: when you fail to apply for VAT registration within the period defined by the VAT
VAT deregistration: The authority can initiate tax audit to ensure the company has deregistered on proper grounds and applied for deregistration within the timeframe stated in the law.