There is quite a list of terminology that people should get themselves familiar with in order to keep up with the era of the tax system in the UAE. Along with this is the understanding of how the tax system works in the country and what should be done in order to fully comply.
Is There a Tax Audit in the UAE?
Just like any other country with a tax system, a tax audit exists in the UAE as well. The government or the Federal Tax Authority (FTA) can conduct an audit of a company anytime according to their own discretion.
What is a Tax Audit?
A tax audit is basically a government’s assessment of a company about their responsibility as a taxable entity. This kind of audit is conducted by the FTA to ensure that every liability is paid and every tax due is collected and given to the government within the timeframe given.
The government also assesses a company whether they are following certain responsibilities that apply to their business as per the tax laws (VAT Law, Excise Tax Law, etc.).
How Does a Tax Audit Work?
There can be two scenarios in a tax audit. Audit firms in Dubai may decide to conduct it in the premises of the company or the FTA may contact the company to bring certain documents for the purpose of the audit. Either way, a company that is requested to be prepared for a tax audit should be prepared indeed to avoid any problems.
It is best for a company to comply with all the tax-related laws and always be organized with correct documentation and recording of financial statements.
What Can You Do to Be Prepared for the Audit?
A tax audit reviewer can help you to be always organized so that when your company is requested for an audit, you are all set up to face the tax audit that people seem to be worried about.
The list below shows the kinds of reviews that can be done in order to prepare you for an upcoming audit:
Review of the system
Since the tax has been announced to commence in the UAE on the first day of 2018, businesses have found their way to ensuring that every department is ready to face a new era. One of the most important to be updated is accounting software. The latter should be following the laws with regard to taking care of VAT accounting.
A review of the systems will ensure that there is no inconsistency with the recorded transactions. A double check by a tax audit reviewer on an accounting software if it is doing its job is a must.
Review of Calculations Tax
It is important that businesses ensure that they are complying with the laws by checking that the calculation of both output and input taxes are correct. As a basic rule, the tax rate is at 5% only. Any goods or services that fall under zero-rated and exempted tax should be treated as it is with documents for support.
Review of VAT Returns
A tax audit reviewer will review the VAT returns that need to be filed by your company to ensure that they will be done so in the correct manner with the values properly recorded in the right boxes and the needed information are filled in (zero-rated supplies, input credits, exempted supplies, etc.). The reviewer will make sure that it is filed within the timeframe as per the government’s scheduling of VAT return filing.
Review of Payment of Tax Due
The correct amount of tax due should be paid in the due date or even before it. A tax reviewer will ensure that you are not drawing any negative attention to yourself by missing the timeframe of tax payment to the government.
Leading Consultants for VAT Registration in Dubai, UAE
Farahat & Co. is a regulated Tax Agent in UAE. We have a team of experienced professionals who have VAT Certificates, showing their expertise in the field. The VAT consultancy services in UAE that we offer is for businesses that need to be continuously stable when it comes to complying with the UAE Tax Laws.
We can also help in reviewing your company for an upcoming auditor to prepare you for a possible audit. This kind of tax audit review can also ensure that you are indeed following the UAE Tax Laws.
Our knowledge that spans for 35 years that we have been in the business industry is an edge that we have in helping companies in the UAE.
The team that handles our VAT consultancy services for you can surely help you in managing the tax era.
You can contact us now and book a free consultation and have someone explain to you all about tax audit review.
Read More : How to Reduce Your Small Business Tax Burden.