Things You Need To Know About Tax Audit in UAE 2019

Taxes are vital for the government of a country. The revenues collected through taxes is used for the development of a country. So, a country has to perform a tax audit from time to time for different small business bookkeeping. Conducting a tax audit will help the government to understand whether a company is involved in any type of tax fraud or not. It will also make the calculation of income from filing of returns from income quite easy.

What Exactly Is A Tax Audit?

A tax audit is a process through which a country’s government attempts to assess and analyze the responsibilities of a business when it comes to paying taxes and whether the firm does so properly or not. In Dubai, this process is handled by the Federal Tax Authority which ensures the timely payment of taxes by all businesses. This tax is submitted to UAE’s government which uses the same to develop the country’s economy and infrastructure. It is also the responsibility of FTA to check if a company is eligible to pay other important taxes like excise tax, VAT, etc. as per the rules and regulations laid down by the government.

Auditing From Office

The Federal Tax Authority (FTA) may demand a company that is being audited to provide proper documents necessary for verification. This method can take more time as compared to others as there will be a lot of communication and permissions. Also, acquiring the required data from the firm would need different permits from the management which would require more time. Before performing an audit, FTA will issue a notice to the organization before the five days of the audit date. The notice will include all the necessary details like the timetable of the audit, the venue where it will be done and the reason for performing the audit. The company should maintain all the books and records ready so that there is no hindrance in the process of auditing. If the company which is being audited fails to offer all the required documents to the editor, then they have to pay certain penalties.

There are certain cases, like a suspected tax evasion or doubt that notifying a firm would put off the auditing process; the FTA won’t offer any notification of tax audit to the organization. After the audit is completed, the FTA will produce an auditing report to the company. The report will include the results of all audits performed like a financial audit, fraud investigation audit, etc. It will also confirm if the company is liable to pay any penalty or not. The law states these penalties.

Documents Needed To Perform Tax Audit

As soon as you get a notification that your company is going to be audited, you need to keep specific documents ready for the auditing services   to be done smoothly within a short time span. Some of the documents which are necessary for performing an audit are mentioned below-

·         A record of all existing inventory of the firm, receipts and tax invoices.

·         All tax invoices and tax credit notes or any alternative documents for both of these issued or received by the firm whose audit is being done.

·         Records of all goods and services disposed off, exported or used by the business.

·         Any records of goods or service being imported by the firm such as supplier invoice or customs declaration.

·         The firm’s books of accounts such as balance sheet, ledgers, trail balance, profit and loss account.

Keeping all these documents which have been mentioned above ready will ensure that the auditing process is quick and there are no obstacles to it.