FTA VAT Audit in UAE | What are the Required Documents for VAT Audit

VAT audit is a full detailed examination of records and books of accounts of your business. It is an examination by the FTA to assess the risk held by an individual or a company. After almost two years of VAT implementation in Dubai, it’s evaluated that 95% of the total registrants have completed their 1st tax year. It’s good time for them to get themselves prepared for VAT Audit. Tax audits in the UAE generally conducted by the Federal Tax Authority (FTA) Representatives. Not all the businesses registered under VAT will be audited. Federal Tax Authority (FTA) will pick random companies for VAT audit. 

Inspire Ms Tax Consultancy can assist businesses in the process of VAT refund following the VAT law, rules, regulations and refund conditions. We can also assist businesses in the process of Voluntary Disclosure under UAE Value Added Tax. A business must deregister under UAE VAT if their taxable supplies for the last 12 month is less than AED 187,500.

Auditing services has a purpose to verify the accuracy and correctness of VAT Returns generated from the financial management system of the company. Tax audit will verify the liability of VAT by examining the accounting and bookkeeping records and VAT return filings which taxpayer is maintaining. VAT audit will include reviewing and accessing all the financial records of the business along with the bank statements. Federal Tax Authority (FTA) can ask for the documents in hard or soft form. FTA will check the purchase invoices, sales invoices and review the books of accounts along with the VAT returns submitted to FTA.

Selecting a business for a vat audit is completely FTA’s decision. There are certain factors that can be considered for selecting a business for a tax audit, such as:

1. Large scale businesses
2. History of late tax submissions
3. The occurrence of incorrect tax filings
4. The complexity of a business

Who should file the VAT return in the UAE?

All the businesses in the UAE must be registered as a VAT payer in the following cases:

• If their company is resident in the UAE;
• If it delivers or gets goods from the UAE, or services are provided in the local market.
• The annual turnover of goods or the volume of services subject to VAT exceeds 375,000/- AED (i-e; around 102 thousand dollars).

Required Documents for VAT Audit in UAE:

• All the records of import and supply of goods and services.
• Tax invoices and alternative documents linked with purchases.
• Tax credit notes which were received and issued.
• Issued documents and tax invoices.
• Records of goods and services that have been disposed off or used for matters not related to business (but records showing taxes paid for the same).
• Purchase records of goods, services and for which the input tax was not deducted.
• Exported goods and services records.
• Records of adjustments or corrections that were made to accounts or tax invoices.
• Details of goods imported along with supplier invoices and custom declarations.
• Records of fixed asset or capital asset purchased and also the amount of input VAT claimed.

Major Things Reviewed During Tax Audit in the UAE

The taxable businesses are required to acknowledge the major aspects that go under the FTA radar during a vat audit in the UAE. The following is a list of things that can get reviewed during a tax audit in UAE:

1. Accounting Software & System

Taxable businesses are required to use proper accounting software to ensure complaisance with the UAE VAT Law. Proper accounting software will assist the companies reduce potential errors and discrepancies while filing tax returns in the UAE.

Accounting software should properly generate the reports and records as defined under Article 2 of the Tax procedures Law. The best VAT consultancy firms in Dubai and Abu Dhabi assist the businesses in deploying the best accounting software.

2. Output Tax Review

The tax auditors in UAE also check zero-rated, exempted & standard rated tax that are calculated as per the UAE tax laws. They also make sure that the standard tax rates are applied on taxable supplies (5% or Zero%) and goods which are eligible for zero-rated tax are charged as zero tax only with proper official and commercial evidence. 

They also check the records of the goods that are imported into the United Arab Emirates, whether they have been recorded as per the RCM (reverse charge mechanism) or not.

3. Input Tax Review

At the times of vat audit in the UAE, the review of input tax is subjected to determine if expenses and purchases are eligible for tax calculation. The UAE tax auditors check the input credits are validly taken for 5% and 0% supplies and not taken for exempted supplies and certain specifically restricted input tax like entertainment services. 

The tax auditor focuses on whether the taxable person has received the proper Tax Invoice with their TRN to ensure eligibility of input tax credits and other provisions. 

4. VAT Returns Review

The tax auditor will verify the submitted VAT returns with the accounting records to assure the completeness of the records and the VAT returns. To ensure compliance with the law, the filed VAT return must be checked by Tax Consultant in UAE before submitting to the FTA, .

They check all the files whether they go along with the requirement of the tax authority or not. Consult with the best VAT Consultancy firms in Dubai to meet the requirements of the FTA during the tax audit in UAE.

Notification of the Tax Audit Results

The Federal Tax Authority will notify the businesses subject to Tax Audit about the final results of the VAT Audit within 10 business days from the completion of the audit as per Article 17 of the Tax procedures Law.

The businesses that have been subjected to the vat audit in the UAE are allowed to view or obtain the documents and data on which the FTA based its assessment of Due Tax. This right of the businesses is enshrined in Article 17 of the Tax Procedures Law.

How Inspire Ms Tax Consultancy will Help ?

Xact Auditing will entirely represent your business in front of the Federal Tax Authority (FTA). Our tax experts will ensure that everything is in line with the FTA’s law and regulation. Let Xact handle all your VAT aspects and save your business from unnecessary VAT fines and penalties. 

Inspire Ms Tax Consultancy is providing a VAT health check to ensure VAT compliance. We highly recommend that all VAT registered businesses must conduct a VAT health check at least twice a year to ensure that the business is compliant with updated tax laws and regulations.

Inspire Ms Tax Consultancy is providing the best VAT services that are in line with the standards and rules of the Federal Tax Authority (FTA). For all kinds of services related to VAT, Contact Inspire Ms Tax Consultancy!