Tax Audit under UAE VAT

Tax Audit is one of the compliance checks to verify a person’s VAT liability is correct by way of examining various records which are maintained by the taxpayer. A tax audit may be carried out at the taxable person’s business premises known as ‘field tax audit’ or in the offices of the FTA. Generally, prior notification of an audit will be given to the taxpayer.

 

VAT is a self-assessment tax, meaning the taxpayer himself assess the amount of tax payable and recoverable input tax based on the supplies done during the period and reports it to the FTA through VAT returns. In order to assess the self-assessed declaration is correct or not, the tax audit procedure is used by the FTA.

 

During the audit, if there are some discrepancies resulting into underpayment of the VAT or over claiming the input VAT deduction, the FTA will issue a notice in the form of assessment asking the taxpayer to pay the VAT along with penalties. So it is always better to conduct an annual audit with the help of a registered auditor in UAE to avoid FTA penalties.