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In order to determine the accuracy of the VAT liability of a taxpayer, a tax audit reviews several documents held by the taxpayer. A tax audit examines the duties of taxable entities and whether their responsibilities are being fulfilled in compliance with tax laws.

The Federal Tax Authority (FTA) is responsible for conducting the taxable entity's annual tax audit to ensure all liabilities are charged, collected, and turned over to the government within the specified timeline. As a result, the taxpayer will receive an audit notice in advance.

The Tax Audit's Preparation

  • Seek Assistance from your Tax Consultants

    To ensure that the company will be ready to check the tax audit. A tax consultant can assist all the companies in setting up and similarly preparing all the documents needed for the tax assessment.

  • Organize your records

    Ensure all the necessary documents, which will eventually be requested to present during the assessment, are ready. Remember that poor records may result in penalties.

  • Prepare the following
    • Review of the system

      Make sure that the accounting software is up-to-date and should be compatible with the requirements set by the Federal Tax Authority.

    • Review of Calculation of Tax

      The calculation of the company's output and input taxes shall comply with the laws set by the UAE – the rule states that the tax rate is at 5% only.

    • Review of VAT Returns

      The tax consultant shall adequately check the returns, guaranteeing that all the values are appropriately recorded, and all the information is included.

    • Review of the Payment of Tax Due

      All tax payments must be paid accurately on or before their due date.

The Penalties Correlated to Tax Audit in the UAE

Noncompliance with tax laws will probably result in penalties. The Ministry of Finance (MOF) has issued a set of disadvantages to those guilty of non-compliance. The following are as follows:

  • Non-maintenance of financial records – AED 10,000
  • Submission of an incorrect tax return by the Registrant – AED 3,000
  • Repetition of submitting false tax return – AED 5,000
  • Failure of the person conducting business to support the work of a Tax Auditor – AED 20,000
  • Failure of the taxable person to submit a registration application within the time frame specified in the tax law – AED 20,000

These violations of tax laws can also lead to imprisonment of the authorized signatory and can be considered a criminal offense.

How can we give you help?

Our Tax Consultants in UAE will help you prepare all the requirements for your Tax Audit by extending our help to your company. With the skills, experience, and knowledge, you can ensure your company follows the Tax laws in its taxable transactions. Additionally, we offer solutions for your unavoidable issues.

With more than a decade of experience, we have worked with many public and private sector companies. Moreover, we are a licensed and approved tax agency under the Federal Tax Authority (FTA).