Due to an increase in Globalization and the opening up of the economies of the middle east, many international companies have found themselves trying to capture the middle eater market. these companies must keep in mind the various rules and regulations which are applicable to such companies in the United Arab Emirates.
One of the fairly new things for such companies to keep in mind is the newly implemented Value Added Tax (VAT) on the supply of taxable goods and services. VAT is applicable on goods and services from 1 January 2018 and is a huge step for the UAE government to generate an extra source of income.
Some companies can conduct tax fraud and submit less or no tax to the concerned authority. To curb this situation, the Federal Tax Authority (FTA) can conduct tax audits which is an examination of how much taxes are to be given by a company and whether they are filing the correct amount of taxes.
Let us know the definition of Tax Audit.
What is a Tax Audit?
According to the Federal Decree-law no. 7of the Tax procedures law, a tax audit can be explained as the process of examination of all the data and commercial records of a taxable person or entity in the United Arab Emirates. This tax audit is performed by the FTA with the objective of ensuring the taxable entity has paid the correct tax amount to the government within the required time frame.
During the tax audit, various tax agents who are affiliated with the FTA can assist the companies with the pre and post-audit to ensure VAT compliance. The companies should keep in mind that they should opt for Tax Agents who are affiliated with the FTA and not any other tax agents. This way, the companies can be assured that a familiar firm is looking over the financials of the company, and no wrongdoing is being committed.
The Process of Tax Audit
After a company files, their tax returns the FTA can choose any company to conduct a tax audit. there is no fixed method to choose the company of which the tax audit is conducted. It can be conducted as per any reason as deemed fit by the FTA.
The company chosen for a tax audit is provided with a notice from the side of the FTA 5 days in advance of the audit date. This notice will comprise all the necessary details related to the audit, such as the place where it will be conducted, the involved parties, and the reason for conducting the audit. FTA can appoint the tax agents to conduct the tax audit of the company.
The company being audited can request for the identification cards so that they can be sure that Tax Audit is being conducted by the correct authority. The auditor, on the other hand, can ask for the original copies of the business records required. If required, the FTA has the authority to ask for additional financial records and can even take samples of goods and other assets of the company.
After conducting the tax audit in case, any discrepancy is found then the audit can have an impact on the tax returns of the company. The auditor can even initiate a re-audit if they feel the need for such a process.
In order to make the auditing process easy and simplistic, the company which is being audited can take the assistance of a Certified Tax Agent. This tax agent will assist the company for the duration of the Tax Audit. The tax agent will help the company to prepare the required financial documents for conducting the tax audit.
If you are looking for a certified tax agent in the United Arab Emirates, then you avail the assistance of Jaxa Chartered Accountants.
