Guidelines for Post Clearance Audit in UAE

Every business in the UAE involved in importing or exporting goods must follow customs regulations, along with applicable taxes and duties. Complying with these rules requires effective management and careful planning, the regulations can be complex, and remaining fully compliant with the movement of goods can be genuinely tricky, especially for larger businesses. Shipping requirements are also frequently subject to change, making it difficult for businesses to keep up with the latest procedures.

In our experience, most businesses aren’t proactive when it comes to compliance matters, leaving them at risk of fines and penalties from the UAE Federal Customs Authority when errors and violations are uncovered during a customs audit or post-clearance audit. There’s also the possibility of missed opportunities for duty savings.

Why Do Businesses Get Audited by the UAE Federal Customs Authority?

The UAE Federal Customs Authority is the government authority overseeing all customs-related procedures. It regularly reviews import and export declarations, company official returns, and other relevant documents to confirm a business is fully compliant and paying the right amount of import and export taxes at the right time. The authority also conducts official post-clearance audits to confirm duty reliefs are applied correctly. A business scheduled for an audit receives written notification, or in some cases a surprise visit.

Also check: Customs Reconciliation and Customs Audit

How Post-Clearance Record Retention Relates to Corporate Tax Retention

Customs records must generally be maintained for at least five years from the date of the relevant transaction with the customs authority. This is a separate obligation from UAE Corporate Tax record retention, which generally requires financial records to be kept for 7 years from the end of the relevant tax period under Federal Decree-Law No. 47 of 2022. A business relying solely on the 5-year customs retention period could find itself short of the Corporate Tax requirement for the same underlying transactions, particularly relevant for import/export-heavy businesses where customs and Corporate Tax records often overlap significantly. Treating 7 years as the practical minimum retention period, rather than the shorter customs-specific figure, avoids this gap.

How Can I Prepare My Business for a Post-Clearance Audit?

If notified of an audit by the UAE Federal Customs Authority, it’s recommended to contact a customs auditor or customs broker. An expert can provide guidance tailored to the specific parameters of the audit for your business.

While preparing, remember the tax authority already holds digital records of import and export filings. Being completely honest when disclosing information matters, even where you believe nothing was done wrong. Withholding information, if discovered, tends to make matters considerably worse for the business in the long run. Disclosing any suspected violation proactively, before it’s identified during the audit itself, generally leads to a better outcome than having the authority uncover it independently.

Must check: Audit & Assurance Services

Useful Tips to Prepare for a Customs Audit

• Contact a customs auditor immediately. An auditor independent of the UAE Federal Customs Authority can help confirm your business is genuinely ready for the official audit, and can represent your business when a tax officer arrives.
• Gather all relevant documents. Examine transactions relevant to the audit’s focus, gathering notes, receipts, invoices, and other paperwork. Records generally need to be maintained for at least five years from the date of the relevant customs transaction.
• Consider voluntarily reporting errors and violations. Voluntary disclosure, particularly before the audit itself, can meaningfully reduce penalties compared to a tax officer identifying the same error independently.
• Prepare answers to common audit questions. Does your business have dedicated customs strategy oversight? Does it have compliance and risk management plans in place? Do you know your business’s total annual duty and VAT paid? Does the business maintain annual import value records? Is the full supply chain understood, including the latest classification and tariff regulation changes?

Common Findings in a Post-Clearance Audit

• Incorrect tariff classification. Goods classified under the wrong HS code, resulting in an incorrect duty rate being applied.
• Valuation errors. Customs value calculated incorrectly, particularly where related-party transactions or bundled shipping costs are involved.
• Missing or incomplete supporting documentation. Import/export declarations that can’t be fully substantiated with invoices, contracts, or correspondence.
• Incorrectly applied duty reliefs or exemptions. Relief claimed without meeting the full underlying conditions, a common trigger for post-clearance findings.

Documents Required for Review by a Customs Officer

The important documents your business should prepare for review typically include:

• General ledger accounts
• Inventory records
• Disbursement records
• Foreign vendor payments
• Correspondence with foreign suppliers
• Customs entry records, both electronic and manual

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co., a trusted Audit And Accounting Firm, provides customs audit preparation, documentation review, and representation support for post-clearance audits by the UAE Federal Customs Authority.

Contact Farahat & Co. today to discuss your post-clearance audit requirements.