What businesses need to do to survive VAT audit in UAE?

What are the VAT / Tax Audit?

VAT / TAX Audit is an examination of risk of an assess able individual or Company by the Federal Tax Authority. Audit is led by the specialist to check whether the expense risk is paid within the due date and whether such liabilities are legitimately touched base according to the arrangements of the significant laws, for example, UAE VAT law, UAE Excise Tax law, and so on.

Business can survive VAT Audit by following below procedures and reviews:

Process Review - Accounting & Documentation

With the introduction of VAT since 01st Jan 2018, all taxable persons are required to maintain complete set of accounts and documents as prescribed in law and to keep the same for next 5 years. Business must do Accounting & documentation process review to ensure that there is no irregularity in recorded transactions and related documents.

Review of compliance and calculation of output and input VAT

There are various provisions under VAT law which governs calculation and reporting of output and input VAT, to check accuracy of VAT calculations and reporting business must conduct periodic reviews to ensure correct calculation and reporting of VAT.

Review of Submitted VAT return and identification of need to submit voluntary disclosure (if any)

There is a misconception that filing of VAT return is the last step of a tax period although it is the first step towards VAT audit. Businesses should review their already filed VAT returns and make sure that all supporting documents are available with them for upcoming VAT audit. Also businesses should file a voluntary disclosure on identification of errors or mistakes subsequent to VAT filing as penalties are very stiff if such error identified during VAT audit conducted by Federal Tax Authority.

Review of VAT payment, refund and penalties

Businesses should be aware of VAT payment & refund procedures, due dates of VAT payment and consequences of non-compliance’s. In any part of the world, payment towards government dues is very sensitive. Business should take care of the same and must conduct periodic reviews of VAT payments, refunds and penalties. Review of VAT registration status for amendments / deregistration: As per VAT law tax registrants should inform or apply for amendment or deregistration within 20 business days from the date of the occurrence of any changes past registration to avoid penalties and further consequences. Businesses should conduct periodic review of VAT registration status and apply for amendments (if any) within time frame for smooth business operations and VAT filings. Flying Colour Tax Consultants competent team could assist you in: •VAT Registration, VAT Group Registrations, deregistration and amendments. •Registration under tourist VAT refund scheme. •Review of complete procedure and compliance related to VAT. •Assistance in selection of VAT compliant Accounting Software. •Timely and Correct Submission of VAT Tax Return (Form VAT201). •Timely and Correct Submission of VAT Tax Refunds (Form VAT311). •Assistance in preparation of FTA compliant Books of Accounts. •Assistance in FTA compliant Record Keeping, Documentation and Audit File and many more. This blog post is written by Mr. Dilip. Feel free to call our Tax Advisor today for a quality consultation relating your VAT related queries. Please send inquiry to info@flyingcolour.com or call us +971 4 4542366.