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Guidelines for Post Clearance Audit in UAE

Every business in UAE that's involved with the import and/or export of goods in are to follow the customs regulations, as well as a tax and duties as appropriate. Complying to rules involves effective management and careful planning as the regulations can be complex and remaining fully compliant with the movement of goods can be quite tricky, most especially for big businesses. Shipping requirements are also frequently subjected to complex changes, making it incredibly difficult for businesses to keep up with all of the latest procedures. 

In our experience, the majority of businesses aren't proactive when it comes to compliance matters. This means they are at risk of getting fined and penalized by the UAE Federal Customs Authority when errors and violations are uncovered during a customs audit or post audit clearance in UAE. Also, there is the possibility of several opportunities missed when it comes to saving duty. 

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

The UAE Federal Customs Authority is a government authority on all Customs-related procedures. They regularly carry out reviews on import and export declarations, company official returns, as well as other relevant documents in order to make sure a business is fully compliant and is paying the right amount of import/export taxes at the right time. The tax authority also conducts official post clearance audits in UAE to ensure duty reliefs are applied correctly. A business that will be scheduled for an audit will get a notification from the tax authority in writing or by a surprise visit. 

Given that a tax authority compliance check and post audit clearance are both daunting prospects to businesses importing and exporting goods between countries, it's absolutely important to be proactive, not only with the process of custom audit in UAE but also in managing of goods movement as a whole.

Read More : Formalities and Cost for Customs Audit.

How Can I Prepare My Business for a Post-clearance Audit in UAE?

 If you've been notified regarding an audit by the UAE Federal Customs Authority, it is recommended to contact a customs auditor in Dubai UAE or your customs broker. An expert will provide you with personalized guidance that is based on the parameters of the audit for your specific business. 

As you are preparing, remember that the tax authority already has digital records regarding import and export filings. It is important that you are completely honest when disclosing information to the tax authority, even when you think you haven't done anything wrong. Being caught in withholding information is going to make your business suffer in the long run. It is always best to disclose any violation you think you have committed even before it is targeted as that can lead to better results for your business rather than the tax authority finding out your business has violated regulations during a post clearance audit.

Read More : How to Prepare for a Customs Audit in UAE.

To prepare for a customs audit in UAE, here are some useful tips to remember:

  • Contact a customs auditing firms in Dubai UAE immediately. A customs auditor that is not from the UAE Federal Customs Authority can ensure that your business is ready for the official post clearance audit. Knowing possible issues of a customs audit when the official process happens will let you be more prepared when investigated by the tax authority. Also, you can hire a customs audit specialist in representing your business when a tax officer arrives. 
  • Gather all the relevant documents. Examine the transactions that are relevant to the focus of the customs audit. You are going to need all relevant notes, receipts, invoices, and other paperwork. Be aware that records are to be maintained for at least five years starting from the date of transacting with the customs authority. 
  • Take into consideration reporting errors and violations voluntarily. Voluntary disclosure can always aid a business, most especially before the actual customs audit as penalties can significantly increase when a tax officer himself uncovers an error. 
  • Have answers to the most common questions asked during a post clearance audit in UAE. Do you have specific customs strategies that are overseen by a team or dedicated person? Does your business have compliance plans and risk management plans in place? Do you know your business's total annual duty amount and total annual VAT paid? Does the business have records of the annual value for its imports? Do you know all steps of the supply chain of the business? Does the business know and implement all the latest changes to legislation including regulations on classifications and tariffs?

The important documents that your business prepares for review by a tax officer sent by the Customs authority include the following: 

  • General ledger accounts 
  • Inventory records 
  • Disbursement records 
  • Foreign vendor payments 
  • Correspondence with all foreign suppliers 
  • Customs entry records (including electronic and manual records)

To know more about customs audit in UAE, contact us here in Farahat & Co today! 

Read More : Top Audit Firms in Dubai.

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions.