The tax audit proceedings stood as a mandate for the business entities in UAE after the Emirati Government and Federal Tax Authority (FTA) collectively implemented the Value Added Tax (VAT) on the supply of goods and services from 1st January 2018. The move has been made to figure out compliance with the legal provisions of the stated law. Audit stands as a scrutiny process that measures the reliability of an organization. This treatise will guide you through the necessary steps that you need to go ahead with when it comes to a tax audit.
What is a Tax Audit?
Tax Audit stands as a government’s assessment that is conducted to monitor a business entity and its tax compliance. In-depth scrutiny is done to figure out that every liability is paid on time, and the tax proceedings stand clear with the government. In the nation of UAE, the Federal Tax Authority (FTA) looks into the tax proceedings of corporate entities and make sure that every entity abides by the rules and regulations stated by the Government.
Federal Tax Authority (FTA)Tax Audit Scenario in the UAE
The Federal Tax Authority (FTA) takes utmost care while dealing with the tax proceedings for a business entity. The procedure includes:
- The Audit proceedings will conduct the audit process as per their internal guidelines. Now, the processes can be done either in the business entity or even FTA might even call the documents to their office.
- The authority has the full flexibility to conduct an audit process at any time, and no reasons are to be provided
- Prior to five days of the audit process to be conducted, the FTA gives notice to the business entity
- In between the audit process, the auditor might ask for original business records and relevant documents to clarify any doubt which might occur.
- The business entity holds the complete right to cross-check the credentials of an auditor which is issued by the Federal Tax Authority (FTA) before the audit process.
- The audit process can be carried out only during the working hours of the business entity.
- During the audit process, it is recommended that the business entity engages its tax agents, approved auditors, bookkeeping and accounting experts to clarify relevant doubts (if any). In case, if the audit process is conducted outside the business premises, the presence of the expertise is recommended at the time of the audit.
- After the completion of the audit process, the FTA assigned auditor will issue an audit report that will include complete findings during the audit process, relevant suggestions. The auditor possesses the full right of re-auditing a business entity in case if any suspect exists.
How to be Prepared for Tax Audit in the UAE?
As per the legal rules, every business entity is expected to comply with the tax proceedings as stated. Non-compliance with the relevant circumstances would lead to penalties and downfall in the company goodwill. Prior to the final audit proceedings, an internal audit gets conducted by the VAT experts to understand the business in a better way and ensure that the business is:
- Adhering to the stated tax laws
- Has adopted the relevant proceedings
- Manages transparent bookkeeping and accounting records
- Files VAT return on time
To get better clarity, it is recommended that the business entities must undergo the VAT proceedings once a year to ensure that the entity stands firm while dealing with the company laws. The best way to conduct an error-free Tax Audit process is to join hands with professional experts who are well-versed with the related proceedings. By doing so, you will be availing multiple benefits which are stated highlighted in the next section.
Benefits of Availing Professional Service for Tax Audit in UAE
Once you avail the professional services for your business entity, you can gain the following benefits:
- Invest your time in business planning and strategy building
- Involve your employees into multiple tasks
- Error-free audit process
- Market insights from the experts can be known easily
- Figure out effective solutions for the loopholes figured out
How Can JAXA Help You to Prepare for Tax Audit?
JAXA Chartered Accountants stands as a DMCC Approved Auditor, specialized in providing customized solutions when it comes to Audit, Tax, Bookkeeping and Accounting. Since it’s inception, the entity has been helping multiple business owners and entrepreneurs to deal with their business proceedings while they are busy with business planning and strategizing. Our business experts are well-versed with the audit procedures and can help you to get better clarity on the loopholes present in your business entity, and provide tailored measures to bridge the gap. If you hold any doubt or want to speak to our experts, do contact us-we’d be glad to assist.