Accounting & Audit requirements for UAE companies

Accounting requirements for UAE companies

For the proper functioning and control of a business, maintaining the accounts is very important. This will help in getting correct payment and receipt of cash and other entries made by the company. Therefore, under the UAE Company and VAT Law, it is compulsory to maintain accounts of the company.

Benefits of accounting services

In UAE, there are a lot of companies which would be catering to book-keeping, audit and wide range of accounting and VAT services for the business. Below are the benefits of accounting services:

• It is in the best interest of the company to not hire a full time accountant and rather use the service of a specialized accountant which would help in keeping costs in check. Companies would not have to equip their office with a separate place and also buy specialized software. An outsourced accountant would give high end results.
• This would help the manager of the company to focus on his main task which is development of the company, rather than fixing issues of reports and filing returns.

What is Tax Audit?

The Tax Procedures Law (Federal Decree Law no. 7), issued by the UAE Ministry of Finance defines Tax Audit as a procedure undertaken by the Authority to examine the business records or any data or information associated with a individual or conducting business. FTA may perform the Tax Audit at its office or the place of business of the individual subject to the Tax Audit or any other place where business are operating, stores goods or keeps records.

Role of VAT or Tax Auditor during a Tax Audit

Tax procedures law defined that the Tax Auditor has the authority to enter the business premises and may briefly shut the business so as to perform the VAT or Tax Audit for not more than 72 hours without previous notice if: 1. FTA has enough grounds to believe that the individual or business subject to the Tax Audit is participating or involved in Tax Evasion. 2. FTA has enough reasons to believe that not briefly closing the place wherever the Tax Audit is conducted can hinder the conduct of the Tax Audit. During a Tax Audit, the authority will have the right to obtain any records (original or copy), verify stock or assets of the business where the audit is proceeding or even seize them for the purposes of audit. It is the duty of the Person subject to a Tax Audit, his Tax Agent or personal representative shall facilitate and supply help to the Tax Auditor to perform his duties.

Importance of TAX Audit for your Company:

Federal Tax Authority, the ultimate constitution responsible for collection and management of federal taxes is renowned in efficiently deterring non-compliance on the part of tax payers. Various laws and regulations issued by Ministry levies severe monetary and other penalties, if a registrant is found guilty of non-compliance. To avoid falling under the prospect of non-compliance of VAT, it is always better to conduct a Tax Audit review or a VAT health check-up in your company. A VAT Audit review find out disparities in your companies tax policies and applicable procedures as per UAE tax laws. It is prudent to say that Tax Audit review is rather a necessity than an option since it’ll add a company to face a VAT Audit. VAT Audit review can assist you in understanding the causes of non-compliance and address them for the past and also the future. It will help you in identifying the areas which require correction while assuring the accuracy of taxes actually remitted. FTA has set various options for tax payers to rectify their mistakes before undertaking an assessment such as filing a Voluntary Disclosure or a Reconsideration form as the case requires.

How to File the Annual Audit:

• Every company which is liable for return filing should prepare a report on a regular basis. Normally, it is done 3 to 6 months before the fiscal year end.
• Once the report is prepared, it should be authenticated by a Certified Auditor and should be submitted to the administration where the company is registered. The annual return filing takes place during a certain set time period and if not filed on a time then the license of the company cannot be renewed.
• When the audit report is filed there is no corporate tax payable, as there is no corporate tax in UAE. Therefore, the company is liable for the data provided in the financial audit report.

At Flyingcolour, we have professionals who are well aware of the Laws and Rules & Regulations in the UAE which would help you on track in terms of your financial reports and get best of the results. Even if the companies are not required to do an Audit are advised to do so in order to get an idea as to where the company stands and if it is working as per plan without any issues.