FTA Mandated to Audit Tax Compliance in the UAE

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05 Sep 2017

According to the terms of the recently enacted federal tax law, the Federal Tax Authority (FTA) now has the legal authority to conduct a tax audit on someone to assess their compliance with the applicable laws.

The FTA may conduct the audit at its office, the person's place of business, or any other location where they conduct business, store products, or keep records, but the person must be given at least five business days' notice.

During a tax audit, the auditor can request original or copies of documents, as well as samples of products, equipment, or other properties at the person's place of business. The tax audit will take place during the authority's regular operating hours. If required, the Director General can issue an exemption decision to perform the audit outside of normal business hours.

If new information emerges that could affect the outcome of the tax audit, the authority could order a re-audit. Any person who is the subject of a tax audit, as well as his or her tax agent or legal representative, must provide the tax auditor with all appropriate assistance in order for the tax auditor to carry out his or her duties.

The new law gives audited people the right to ask tax auditors to display their professional identification cards, get a copy of the tax audit notice, attend auditing procedures outside of the authority's headquarters, and get copies of any original paper or digital documents deleted or retrieved by the FTA during the tax audit.

In any of the following cases, the authority must issue a tax assessment to decide the amount of payable tax and serve it on the taxable individual within five working days of its issuance: if the taxable individual fails to apply for registration within the time limit set by the tax law; if they fail to file a tax return within that time limit; If they fail to pay the tax due on the submitted tax return by the deadline, if the taxable person submits an inaccurate tax return, or if the registrant fails to measure tax on behalf of another person as required by statute.

The law prohibits all authority staff members from conducting or engaging in any tax procedures related to any individual if the staff member and that person are related up to the fourth degree; if the staff member and that person or any of their relatives up to the third degree have a mutual interest; and if the Director General determines that, due to a conflict of interest, the staff member may not conduct any tax procedures relating to that individual.

Employees of the authority are bound by non-disclosure agreements and are forbidden from sharing information that they received or have access to when working for the authority (save as specified or defined in accordance with the executive regulations).

Employees of the Federal Transit Administration are required by statute to preserve professional confidentiality after their employment ends, and they are forbidden from revealing information obtained or to which they had access when serving, unless otherwise ordered by judicial authorities and in compliance with executive regulations. Anyone who obtains information under the provisions of the law is prohibited from disclosing or using that information for any reason other than the one for which it was collected.

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