Steps to submit VAT return in UAE

What is VAT Audit in Dubai?

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After almost 2 year of VAT implementation in Dubai, it’s estimated that 95% of the total registrants have completed their 1 st tax year. It’s high time for them to get themselves prepared for VAT Audit. VAT audit is a detailed examination of records and books of accounts of your business. It is an examination by the FTA to assess the risk possessed by an individual or a
company. The said examination is done under the guidance of significant laws i.e. Dubai VAT law, Dubai Excise Tax Law. In short, government evaluates the financial viability of the business, in order to pay required tax amount to the government.

How to get prepared for VAT Tax Audit

It is highly advisable for all business entities to make their business ready for VAT audit in Dubai. Failing to, can cause them too much of financial burden in forms of fines and penalties. Below is the checklist:

  1. Adhering to the relevant tax laws.
  2. Tax is charged at standard-rate on all taxable supplies.
  3. Timely filing of its VAT returns.
  4. To ensure that out of scope, exempt supplies are accounted properly.
  5. To ensure supplies on which Reverse charge are applicable are accounted properly.
  6. Claim proper input credits for supplies made.
  7. Proper records i.e. tax invoice, tax credit notes, Custom Bill of entries and Exits are maintained.

Documents required for VAT Audit

  1. Records of all supplies and Imports of Goods and Services.
  2. Tax Invoices and alternative documents related to purchases.
  3. Tax Credit Notes received and issued.
  4. Tax Invoices issued.
  5. Records of Goods and Services that have been disposed of or used for matters not related to Business, showing Taxes paid for the same.
  6. Records of Goods and Services purchased and for which the Input Tax was not deducted.
  7. Records of exported Goods and Services.
  8. Records of adjustments or corrections made to accounts or Tax Invoices.
  9. Details of Goods imported to the state along with Customs declarations and Supplier Invoices.
  10. Records of fixed asset or capital asset purchased and also amount of input VAT claimed.

Procedure: FTA VAT Audit

  1. The Audit can either be conducted at the premises of the business or the FTA may request that all necessary documentation be brought to its office or sent electronically.
  2. An Audit may include accessing and reviewing the financial records of the company both in the hard format as well as electronic form.
  3. The FTA may review the returns filed by an organisation and then proceed to determine if the returns are accurate.
  4. No reason need be given by the FTA for conducting an Audit in Dubai.
  5. The FTA gives notice of at least 5 days to a tax registered business prior to the Audit.
  6. The business have right to ask for the credentials of an Auditor such as a professional identification card.
  7. An Audit is usually performed only during the official working hours of the FTA.(there are few exceptional situation)
  8. On completion of the Audit, the FTA will issue a report indicating any violations observed and the penalties to be paid by the business if any.
  9. The FTA may also re-audit the business if it has grounds for suspicious
    activity.

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