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Audit generally refers to the examination of records, returns and other documents of a registered person to verify that the turnover declared, taxes paid, refund claimed and input tax recovered are correct or not. With the similar objective, Federal Tax Authority (FTA) has introduced the audit process. FTA may request the businesses to submit their business information which will be verified against the details declared in VAT returns.
Once the Tax audit is initiated, the concerned business is required to produce all the information in a prescribed manner known as Audit file. The format of the Audit file will be in FAF prescribed format in which all the information as required, needs to be submitted by the taxable person. FTA expects that the tax accounting software used by the business should be able to generate the Audit file in FAF format, so that the businesses find it easier to generate and respond quickly to FTA’s requests.
FTA audit file should be in ‘comma separated value'(.csv) and should include the following details: –
(1) Company Information – Taxable Person Name (English), Taxable Person Name (Arabic), Tax Registration Number, Tax Agency Name, TAN (Tax Agency Number), Tax Agent Name & TAAN (Tax Agent Approval Number);
(2) Supplier and customers details – the location of customer and supplier i.e. the country or the Emirate along with TRN, if applicable should be provided. Also, you may need to assign the tax codes to identify the nature of supply and
(3) Transactions Details – In FAF file, taxable person needs to report the details at each invoice level. The details such as invoice number, invoice date, invoice value, VAT amount etc. need to be captured in the audit file.