As the UAE corporate tax law is currently active in UAE, it is important to understand the complexities of UAE corporate tax audits with respect to documentation and audit readiness. A UAE corporate tax audit is conducted by the UAE Federal Tax Authority to determine whether a business has accurately reported its financial information and fulfilled its corporate tax obligations. One of the primary requirements of a corporate tax audit in the UAE is maintaining proper and detailed documentation.
Failing to maintain appropriate documentation could impact the UAE corporate tax compliance and potentially result in substantial penalties and non-compliance issues. Working with a UAE FTA-registered tax agent like Jaxa Chartered Accountants ensures that your business has everything it needs to prepare for a UAE corporate tax audit. Our seasoned corporate tax consultants at Jaxa will assist you in keeping documentation organized and audit-ready, which will minimize potential penalties and ensure a smooth audit process
This guide will walk you through the key documents required for a corporate tax audit in the UAE, how long to retain them, and the steps to ensure audit readiness.
Role of Documentation in UAE Corporate Tax Audits
The primary objective of a corporate tax audit by the UAE FTA is to ensure that your business has complied with all tax reporting obligations, including income, expenses, and tax payments. To demonstrate compliance during a UAE corporate tax audit, documentary evidence is required, not mere verbal assurances.
Maintaining proper documentation is essential to maintain integrity of your UAE corporate tax filings. Businesses must maintain key financial records— accounting reports, invoices, bank statements, payroll information, contracts, and expense records — for the relevant corporate tax period to ensure UAE corporate tax compliance.
Without proper financial records and documentation, the UAE FTA will not be able to validate your UAE corporate tax returns, which increases the risk of penalties, audit delays, and reputational repercussions. Good and accurate financial documentation is critical to demonstrating full compliance with UAE corporate tax law and will assist with a more favorable outcome during an audit.
UAE Corporate Tax Preparation Checklist
Worried about an upcoming corporate tax audit in the UAE? Jaxa Chartered Accountants provides this essential checklist to help your business stay compliant with UAE FTA regulations and avoid costly penalties.
Pre-Audit Preparation
Key Financial documents and records
- Confirm accuracy of your trial balance, balance sheet, income, and cash flow statements.
- Gather supporting records, including invoices, vouchers, payroll information, and agreements.
- Reconcile accounts to match all supporting documents.
Tax Return and Payments
- Maintain records of all filed UAE corporate tax returns for the audit period.
- Verify timely payment of all corporate tax obligations with supporting documents.
- Ensure all tax dues are fully settled before Corporate tax deadlines.
Accounting Framework and Compliance
- Document the accounting principles used to prepare financial statements.
- Ensure proper categorization of income, costs, and capital expenditures.
- Evaluate internal control systems to meet UAE FTA audit expectations.
Staff and Payroll Documentation
- Check that all payroll practices adhere to UAE labor law requirements.
- Ensure payroll documentations are complete and compliant.
- Retain all essential payroll information, including employment terms and salary components.
VAT Returns and Supporting Documents
- Compile all relevant VAT reports along with transaction and payment evidence.
- Review all VAT Return filings in the UAE for accuracy and regulatory compliance before the audit.
- Double-check VAT filings and processes to stay aligned with UAE FTA guidelines.
Transfer Pricing Documentation
- Ensure all intercompany transactions are supported by clear transfer pricing documentation.
- Document intercompany transactions in line with the arm’s length principle.
Let Jaxa Auditors, Dubai, handle the pre-audit documents preparation before the UAE FTA request.
During an UAE FTA Corporate Tax Audit
Handling Audit Notifications
- Respond to UAE FTA audit notices promptly to avoid compliance issues.
- Assign a responsible liaison to coordinate all audit-related communication.
Working with UAE FTA Auditors
- Ensure auditors have timely access to all necessary records and data.
- Cooperate with auditors in clarifying financial and procedural matters.
Presenting documents
- Provide well-arranged documentation to facilitate a smooth audit process.
- Clarify any deviations in accounting records upon the auditor’s request.
Staying on Track with Audit Schedules
- Stay aligned with the audit calendar and meet submission deadlines promptly.
- Check in with the audit team regularly for status updates or new documentation needs.
Jaxa Auditors, Dubai, UAE, is a trusted accounting and bookkeeping partner in ensuring a streamlined corporate tax audit process in the UAE.
Next Steps After a UAE Corporate Tax Audit
Assessing Findings from the UAE Corporate Tax Audit
- Examine the audit results thoroughly, paying close attention to the UAE FTA’s key findings and suggestions.
- Engage key internal teams to evaluate the operational consequences of the audit results.
Taking Action on UAE FTA Audit Corrections
- Promptly revise your financial statements to reflect the UAE FTA’s findings and corrections.
- Ensure all audit-related dues are settled within UAE FTA timelines to avoid interest or complications.
- Prepare and submit tax appeals to dispute any incorrect findings by the auditors.
Taking Corrective Action After the Audit
- Develop a structured roadmap for resolving audit-identified compliance issues.
- Assign audit responsibilities to allow for timely resolution and compliance.
Managing and Securing Audit Documentation
- Keep comprehensive records of the audit process as part of your compliance trail.
- Protect audit files with proper data security measures while ensuring ease of retrieval.
Jaxa, a top auditing firm in Dubai, UAE, having immense expertise in UAE corporate tax compliance, helps ensure timely post-audit corrective action.
Document Retention Rules for UAE Corporate Tax Compliance
Under the UAE corporate tax law, all companies, taxable and exempt, must keep their financial and tax records for seven years after the relevant tax period. Records must be kept organized and made available to the UAE FTA when requested.
Non-compliance penalties for lack of documentation and records include:
- AED 10,000 per violation
- AED 20,000 for repeated violations
Proper documentation ensures audit readiness and legal protection under UAE tax law.
Proactive Strategies for Corporate Tax Compliance in the UAE
Businesses aiming for compliance with UAE corporate tax laws should consider the following strategies:
- Identify and address compliance gaps early through ongoing internal tax monitoring.
- Design internal controls to manage tax risks, minimize liabilities, and align with UAE FTA standards.
- Ensure all team members are informed about corporate tax rules and UAE FTA obligations through regular training.
- Partner with UAE corporate tax experts like Jaxa to simplify compliance and prepare for audits efficiently.
- Implement real-time compliance monitoring systems to ensure all financial reporting aligns with UAE tax laws.
Thinking Ahead for Your Next Corporate Tax Audit in the UAE? Jaxa Is Ready to Partner with You.
Preparing for a corporate tax audit in the UAE can be overwhelming for many. Partner with leading and trusted auditing and accounting as well as taxation firm in the UAE and Dubai, and a UAE FTA tax registered agent – Jaxa Chartered Accountants, having 18+ years of experience, as we understand the complexities of corporate tax compliance. Our seasoned corporate tax consultants help diverse clients in maintaining accurate financial records, making documents audit-ready, and ensuring smooth corporate tax audits by the UAE FTA. Our team of immensely certified UAE FTA tax agents delivers various corporate tax services like corporate tax registration, corporate tax filing, corporate tax audit, and corporate tax training in the UAE.
Our commitment to excellence:
With Jaxa Auditors in UAE, You’re Always One Step Ahead of Corporate Tax Challenges.
- Accurate Documentation & Timely Response
- 100% Compliance Assurance
- Stay Aligned with Every UAE FTA Timeline
- Certified UAE FTA Tax Agent.
Stay compliant, stay audit-ready with zero penalty.
Contact Jaxa for trusted corporate tax and VAT compliance solutions in the UAE.
