Value Added Tax Audit: Minimize Your Risk

What is a VAT audit

A VAT audit is the FTA’s review of a registrant’s VAT records, returns and controls to confirm compliance with UAE VAT law. Audits range from desk reviews to full on-site field visits; the FTA uses data-driven checks to target high-risk files and recurring issues.

This detailed process involves a painstaking review of the business’s complete set of financial records, including submitted VAT returns, official tax invoices, and all relevant supporting documentation. The FTA uses this review to validate that VAT has been correctly accounted for across all taxable supplies, zero-rated or exempt supplies, and any import or export activities specific to the nature of the entity.

Why prepare early (top-line risks)

Insufficient preparation increases the chance of assessments, penalties and extended reviews. Recent guidance and market experience show heightened FTA activity and stricter protocols since 2024–25, meaning businesses with complex transactions, frequent refunds, or cross-border flows face higher scrutiny.

Quick readiness checklist (start here)

Reconcile VAT returns to ledgers and bank statements for audit periods.
Collate contracts, import/export docs, and customs declarations for cross-border supplies.
Compile refund claim support and prior correspondence with the FTA.
Prepare an audit folder with period-by-period reconciliations and explanations for unusual items.

Practical preparatory tips — sequentially cited

First, run a targeted risk scan of returns and identify high-delta items (refund claims, zero-rated exports, reverse-charge entries).
Next, fix obvious mismatches and create corrected computations with clear working papers; show the audit trail from invoice to return.
Then, assemble a concise executive summary for the auditor outlining control weaknesses found and corrective steps already taken.
Finally, prepare a single organised submission (digital folder) mapped to the FTA’s requested documents to speed desk reviews and reduce field visits.

Desk audit vs field audit — what to expect

Desk audit: FTA reviews documents electronically or requests uploads via e-Services; prompt, well‑organised responses often limit scope expansion.
Field audit: On-site inspection where the FTA may request originals, interview staff, and test transactional samples; this is more time-consuming and disruptive.

How KWS supports you during an audit

Readiness assessment and pre-audit remediation to reduce exposure.
Document collation, reconciliations, and audit pack preparation mapped to the FTA checklist.
Representation during desk and field audits, managing queries and uploads.
Post-audit remediation plan: corrected returns, voluntary disclosures (Form 211) where appropriate, and negotiation support for penalties.

Desk audit vs field audit — what to expect

Large or frequent VAT refund claims and high refund/turnover ratios.
Material inconsistencies between returns and accounting records or customs data.
Repeated filing errors, late returns, or unusual zero-rated/exports patterns.

Typical documents the FTA requests

VAT returns and Excel reconciliations for the audit periods.
Sales and purchase invoices; credit/debit notes; import/export documentation.
Bank statements, contracts, customs documents and proof of payment.
Any supporting evidence for exemptions, zero-rating or special schemes (e.g., freezone supplies).

Outcomes and follow-up

Audit outcomes range from no action, clarification requests, assessments with tax/interest and penalties, to recommendations for systemic fixes. KWS helps quantify exposure, prepare corrected filings, and negotiate outcomes with the FTA.

VAT Audit Service

What is a VAT audit

Why prepare early (top-line risks)

Quick readiness checklist (start here)

Practical preparatory tips — sequentially cited

Desk audit vs field audit — what to expect

How KWS supports you during an audit

Desk audit vs field audit — what to expect

Typical documents the FTA requests

Outcomes and follow-up

Pricing

Next steps — how to engage