Tax Audit Services
MOE (Ministry Of Economy) Approved Auditors
Tax Audit Services in the UAE
Enter your FTA audit prepared, not scrambling – with tax auditors who know exactly what the FTA is looking for.
Approaching a tax audit in the UAE requires careful preparation, accurate records, and a clear understanding of regulatory expectations. As experienced tax auditors in the UAE, we help businesses manage this process with confidence and clarity.
- FTA-registered tax agent, with over 40 years of experience across VAT, corporate tax, and compliance audits
- Full-scope support, from document reconciliation to direct communication with the FTA on your behalf
- Current regulatory knowledge, including the restructured penalty framework under Cabinet Decision No. 129 of 2025
The goal is not just to meet current compliance requirements, but to help you build stronger financial systems for the long term, so you’re never caught off guard by an audit notice.
What Is a Tax Audit?
A tax audit is an official examination carried out by the Federal Tax Authority to verify that a business has accurately calculated, declared, and paid its tax obligations, including VAT and corporate tax.
During an FTA audit, the authority may review financial documents, VAT and corporate tax returns, invoices, receipts, contracts, and bank statements. The objective is to confirm that the business is meeting its tax obligations in full and in line with UAE tax law, specifically the Tax Procedures Law (Federal Decree-Law No. 28 of 2022, as amended by Federal Decree-Law No. 17 of 2025).
Our Tax Audit Services
Farahat & Co. provides structured tax audit support to help businesses meet FTA requirements with confidence. As experienced tax auditors, our services cover:
- Corporate tax audit: an independent review of your company’s financial records to verify that corporate tax has been accurately calculated, reported, and paid in line with UAE Corporate Tax Law.
- Internal tax audit: a proactive internal review of your tax processes and records, identifying gaps and inefficiencies before they attract regulatory attention.
- VAT audit: a thorough review of VAT returns, invoices, and transactions to confirm compliance with UAE VAT regulations and FTA requirements.
- Compliance audit: a comprehensive check to ensure your business is fully aligned with all applicable Federal Tax Authority regulations, reducing the risk of penalties and disputes.
Who Needs a Tax Audit in the UAE?
While tax audits are not mandatory for every business, certain situations make them a practical or legal necessity.
- High-revenue businesses: businesses with revenue exceeding AED 50 million are required to maintain audited financial statements under Ministerial Decision No. 84 of 2025, a legal requirement and a demonstration of financial transparency to regulators and stakeholders.
- Free zone companies (QFZPs): Qualifying Free Zone Persons seeking the 0% corporate tax rate are generally required to maintain audited financials, regardless of revenue, under the same Ministerial Decision.
- Tax groups: entities forming part of a tax group must maintain audited financial statements in line with FTA Decision No. 7 of 2025 to ensure accurate group-wide reporting and compliance.
- Businesses with related-party transactions: companies that regularly transact with related parties must maintain proper transfer pricing documentation, without which they face a higher risk of FTA scrutiny.
FTA Tax Audit Process and Compliance in the UAE
Notification of audits
The FTA can select any individual or business for a tax audit to verify compliance with tax regulations. Businesses should be ready for formal financial audits, especially concerning VAT and corporate tax. In general cases, businesses have five business days to respond to an audit notice.
Tax audit procedures
During a tax audit, the financial accounts and corporate records of the business are reviewed. Key areas of focus include confirming that standard-rated supplies have been correctly charged, verifying that zero-rated goods and services have been correctly treated, and checking that the reverse charge mechanism has been correctly applied.
Seizure and retention of documents
The FTA has the right to seize and retain relevant documents and assets during the audit process where necessary.
Outcomes of a tax audit
A tax audit may result in a tax assessment, where the FTA calculates unpaid tax and imposes fines on any discrepancy, or administrative penalties for non-compliance or errors identified during the process. To respond effectively, businesses should prepare and present reconciliation statements, review previous VAT returns, ensure the accuracy and currency of tax records, maintain proper documentation, meet all FTA deadlines, and seek guidance from a registered tax agent to identify potential issues early.
Key Steps in Our Tax Audit Process
Our approach to preparing businesses for a tax audit follows a structured sequence:
- Engagement planning and scope: we plan the scope, objectives, and timeframe of the review, in line with UAE laws and regulations.
- Risk assessment: we conduct an initial review of internal controls and potential compliance risks, particularly relating to FTA requirements and financial reporting.
- Document preparation: we help you prepare and organise financial documents, invoices, and related paperwork to support transparency and reduce the risk of penalties.
- Fieldwork and evidence collection: we conduct inspections and gather evidence through interviews and transaction testing, using methods such as observation and recalculation.
- Analysis and evaluation: we analyse the data collected to identify non-compliance or inaccurate financial reporting.
- Reporting and follow-up: we generate a final report with findings and recommendations, so you know exactly what action to take.
Explore Our Audit & Assurance Services
From statutory requirements to specialist investigations, Farahat & Co. offers a full range of audit services tailored to your industry and compliance needs. Browse our audit services below to find the right fit for your business.
Documents Required for an FTA Tax Audit
- Company and legal documents: trade licence and incorporation documents, Memorandum of Association, organisational chart and list of authorised signatories.
- Accounting and financial records: audited financial statements where available, general ledger and trial balance, chart of accounts, bank statements and reconciliation reports, cash book and petty cash records.
- VAT reports and reconciliation: output and input VAT reports, VAT reconciliation between returns and financial statements, VAT working files and calculation sheets.
- Sales and revenue documents: tax invoices issued, sales register and revenue summaries, credit and debit notes, contracts and agreements with clients.
- VAT registration and compliance: VAT registration certificate (TRN), filed VAT returns (VAT 201), VAT payment proofs, correspondence with the FTA.
- Purchase and expense documents: supplier tax invoices, purchase register, expense receipts and payment vouchers.
- Imports, exports, and zero-rated supplies: import and export documents, customs declarations, proof of exports and zero-rated supplies.
- Inventory and assets: inventory reports and stock movement records, fixed asset register with depreciation details.
- Additional supporting documents: previous audit reports where available, internal accounting and VAT compliance policies.
Common Mistakes and Risk Areas
A tax audit can become challenging if records are unclear. Many errors the FTA finds are not intentional, but stem from a lack of proper records, reconciliation, or understanding of VAT regulations.
Common mistakes businesses make:
- VAT returns that don’t match the accounting records or general ledger
- Tax invoices that lack essential details
- Incorrect VAT category applied (zero-rated, exempt, standard-rated)
- Claiming input VAT without proper tax invoices
- Disorganised records that are difficult to locate during the audit
- Bank statements that don’t align with sales and revenue records
- Late submission of VAT returns and payment
- Failure to report credit and debit notes in VAT reports
- Missing customs documents for imports or export documentation for zero-rating
Current Tax Audit Penalties in the UAE
Under Cabinet Decision No. 129 of 2025, effective 14 April 2026, the UAE’s penalty framework was significantly restructured to simplify calculation and improve proportionality across VAT, corporate tax, and excise tax.
- Late payment of tax: a flat 14% per annum, non-compounding, replacing the previous 2% immediate plus 4% after 7 days plus 1% daily structure.
- Errors discovered by the FTA: a fixed penalty of 15% of the unpaid tax amount, replacing the previous tiered structure that could reach up to 50%.
- Voluntary disclosure of errors: a reduced 1% per month of the underpaid amount, calculated from the original filing deadline, encouraging early self-correction.
- Failure to keep proper records: AED 10,000 for a first offence, rising to AED 20,000 for repeat violations.
- Failure to submit requested documents or facilitate an FTA auditor: AED 20,000, and under the revised framework this can now apply to the taxable person, their legal representative, or their tax agent independently.
- Late VAT return submission: AED 1,000 for a first offence, AED 2,000 if repeated within 24 months.
- Failure to issue proper tax invoices: up to AED 5,000 per invoice.
- Failure to display VAT-inclusive prices: AED 15,000.
Because these figures are updated periodically, businesses should confirm current penalty amounts before assuming a specific figure applies to their situation.
Why Choose Farahat & Co. for Tax Audit Services
Since 1985, Farahat & Co. has provided auditing services across the UAE to make tax audits feel clear, manageable, and stress-free. Our team of certified auditors and registered tax agents works closely with you to keep your financial records accurate and your business fully aligned with FTA regulations.
- FTA-registered tax agent, with qualified professionals across CPA, CA, and ACCA credentials
- Practical FTA compliance expertise, spanning VAT, corporate tax, and broader tax audit matters
- Straightforward process, focused on clarity and reducing the stress of an FTA audit
- Tailored solutions, adapted to your specific business setup in the UAE
- Ongoing support, keeping you updated and prepared well ahead of deadlines
