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A tax audit is an examination for a business entity that is meant to uncover the fraud and inaccurate proceedings related to tax and its filing and return. In Jan 2018, the UAE government initiated the VAT proceedings that is a consumption tax. Now, according to the legal laws, a UAE established company needs to conduct the Tax Audit process to meet the stated rules. Being a core member of the business, one should be aware of the process of Tax Audit to get clarity. This guide is drafted for the business professionals to understand how the approved auditors carry out the tax-audit process.
Core Purpose of Tax Audit
A Tax Auditor decides on whether to conduct a Tax Audit process for an individual or business entity. The core purposes of conducting a Tax Audit is to inspect:
- The business premises
- The documents available in the business premise
- The assets available in the business premise
- The accounting methodology used by the individual/ firm
- To figure out loopholes in the business books
Pre-Tax Audit Proceedings
Before a tax-audit takes place, a business entity needs to ensure the following points:
- Adhere to the relevant tax laws
- Adopt the prescribed proceedings
- Update the Accounting and Bookkeeping records
- Proper retention of business documents
- Be handy with the VAT return filing records
In case if the above-stated requirements are not met, relevant penalties will be applied to the taxpayer. Now, it must be understood that the business entity must opt for a listed and registered tax agent for the audit process.
What is the Process of Tax Audit?
A tax auditor follows the below-mentioned steps to while proceeding towards the Tax Audit process:
1.Notice of Tax Audit
The tax-auditor shall obtain a pre-written consent from the Director-General. Also, another permit will be issued by the FTA that allows the auditor to enter the premise where the Audit process would be conducted, which would include information regarding the Premise, Parties Involved, Date, and Time of Audit.
2.Commencement of Tax Audit
According to the legal rules, the Federal Tax Authority should be in a position to access the data, even if it is stored remotely. As per the guidelines, the tax auditor would access and review the financial books of the company. During the process, the Auditor might request certain copies of the business records audited.
It is an important point to note that the Law provides the right to a business to view the credentials of an Auditor.
3.Completion of Tax Audit
The audit process is to be performed only during the official hours and gets completed only after the complete inspection process.
4.Audit Results Gets Drafted
Once completed, the relevant suggestions will be drafted accordingly. This report would include the observations, penalties (if any), audit rank, etc. It will also provide guidelines for the business premise to work and take the necessary steps accordingly. The Authority has got the full power to decides the re-audit process for the business entity.
The approved auditors can help you to get ready with the tax process in a smooth way. Opting for professionals will help you to grab more benefits. Wondering how? Your answer is just below.
Why to Avail Professional Services?
By joining hands with tax-audit experts, you can avail the following benefits:
- Tax proceedings will be sorted in a smooth way
- Eases the Audit process
- Figures the loopholes in the accounting and bookkeeping records
- Act as a guide and provide respective solutions
JAXA Chartered Accountants, since inception, has been providing effective audit services and accounting solutions to business professionals in the UAE. Our audit and tax experts are well-equipped with the tax proceedings and can guide you effectively at every step, providing customized solutions suiting business needs. In case you have a query, speak to our advisors. Contact us today-we’d be glad to assist.
