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VAT Audit

A VAT Audit is a formal procedure conducted by the Federal Tax Authority (FTA) to meticulously examine a taxable business's records, financial statements, and processes. The purpose is to verify the accuracy of all VAT Returns, Refund claims, and Voluntary Disclosures filed by the business and ensure absolute compliance with UAE Tax Law.

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Introduction To VAT Audit

A VAT Audit in the UAE represents a highly structured and thorough examination initiated by the Federal Tax Authority (FTA). The central purpose of this audit is to rigorously assess and confirm that a business is in full compliance with all Value Added Tax (VAT) regulations outlined in the UAE VAT Law. Essentially, the FTA seeks to verify that the business is accurately managing every aspect of its VAT obligations, from charging and collecting to remitting the correct tax amount.

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.

Who Needs to Undergo a VAT Audit?

  • VAT Registered Businesses: Any business that has registered for VAT with the FTA and meets the criteria for VAT audit.
  • Mandatory for VAT-Registered Entities: All VAT-registered businesses in the UAE, regardless of size or industry, may be audited by the Federal Tax Authority (FTA) to ensure compliance with VAT laws, including correct tax collection, reporting, and record-keeping.
  • High-Risk and Targeted Audits: Businesses with high revenues, frequent VAT refund claims, inconsistent filings, or complex transactions involving mixed supplies are more likely to undergo targeted audits. Industries such as real estate, retail, and e-commerce often face higher scrutiny.
  • Random and Non-Compliance Audits: The FTA also conducts random audits to monitor compliance across sectors and investigates non-registered businesses exceeding the mandatory VAT threshold of AED 375,000 to identify potential cases of non-compliance or tax evasion.

How Can We Help

We provide expert VAT audit services to help your business navigate the complexities of VAT compliance. Our services include:

  • Comprehensive VAT compliance reviews.
  • Assistance in VAT return filing and reconciliation.
  • Preparation and support for FTA audits.
  • Proactive identification and resolution of compliance risks.

Documents Required for a VAT Audit

To comply with a VAT audit, businesses must provide:

  • VAT registration certificate.
  • VAT returns and payment receipts.
  • Tax invoices issued and received.
  • Contracts and agreements related to business activities.
  • Input VAT claims and export-related documents.
  • Bank statements and financial records.
  • Records of zero-rated and exempt supplies.
  • Customs declarations for imported and exported goods.