Tips to Consider While Conducting Tax Audit for your Firm in UAE

When you are running a corporate company, you are supposed to take care of the tax that is generated on your income. Paying your accurate taxes is what helps the government with its financial power. While conducting your tax audits, you need to be careful with the assessment. Internal auditing is done just to be sure of your returns so that the credibility of the firm is not compromised when the outer auditors come. Read below to know everything about tax audit in UAE.

What is a tax audit? 

Auditing means carrying out a financial investigation of the accounts. Tax auditing is an investigation about your tax returns. You are supposed to pay the government a certain percent of the tax on your income if you cross some limits of earning. Tax auditing can be done by the government and it can also be done by the firm.

Internal tax auditing is done to make sure you have calculated your taxes with accuracy. The government checks the authenticity of your tax returns to investigate the authenticity of your tax returns.

Tax Audit Procedure and process in UAE

  1. The Federal Tax Authority (FTA) is concerned with tax audit in UAE. 
  2. The FTA has the authority to conduct tax auditing without any specific reason.
  3. The firm being inspected have the right to ask for identification to ensure the FTA agents.
  4. The auditor can ask for original records of your business. 
  5. The Federal Tax Authority investigates during their working hours. An exception can be made. 

Records to be maintained

  1. All the copies and original documentation should be present during the auditing.
  2. The printed/original documentation of all the supplies and exports should be maintained.
  3. All the tax receipts on the received goods should be maintained.
  4. All the tax credit notes received and issued should be present.
  5. Records of disposed of goods should be available.
  6. Records of all the adjustments and modifications made on the good’s receipt should also be kept.
  7. Records of all the goods imported and exported should be taken care of.

How to be prepared for a Tax audit in UAE?

Make sure you consult your legal and financial advisers. Officers investigation your firm can ask for any document they deem fit. You should do your preparations as soon as you receive the notice from the FTA.

Make sure your system is functioning properly. Some firms forget to get their computer systems updated which results in inaccurate calculations. Get your financial team prepared for the analysis of the finances. You should go through all the tax generated on exports. Tax paid on imports. The tax is 5%. Make sure that all the goods which come under the free tax category should be backed by documentation and proofs. Do not forget to review your Value Added Tax Returns. It is to make sure that all the values and numbers put in by you are accurate.

TAX Auditors / Tax consultant

It is prescribed to hire a Tax Auditor, or tax consultant to do the job. They make money out of analyzing your taxes, so it will be great if you hire one for the job. These professionals are crafted by years of practice and experience in the tax field. Their work is to analyze your balance-sheets and minimize your taxation according to the law. 

They can be of great help with the financial consultancy. It is prescribed to go through your records before the FTA does. To be sure about the accuracy of your business records, you should get a tax auditor to do your tax auditing beforehand. It can save you from embarrassment in front of the FTA. Having a good record can help you be on their good side. Internal auditors should be used, but it is preferred to go with an external tax auditor.

Benefits of hiring a Tax Auditor:

  1. You get an unbiased, external view about your taxes and returns. People working for you may cover up some things or can let things slide. Getting a tax auditor from outside of the firm can help you analyze your records with honesty.
  2. An external tax auditor will be deemed more credible than an internal one. When someone from outside prepares your audit report, it gives the market an idea that you have nothing to hide. It makes you seem credible. 
  3. You need an external eye to see if that suit looks good on you. Similarly, when working in the same company, ideas can run stale and internal processes can be unseen. Getting an external eye on your records can help you analyze your internal processes as well.
  4. The external auditors are packed with broader and more experience in auditing. The internals, comparatively, doesn’t have enough experience with other companies. Here is where you can make use of the externals. External Tax Auditors can use their experience with various companies to give you a good view of your firm.
  5. Your internal auditors can use an external auditor to better their skills. You can better your internal auditors by making them experience the work of someone who has worked with multiple companies. 

If you are looking for some tax auditors in UAE, you should check out CDA accounting & Bookkeeping Services LLC. They are packed with professionals in various fields of financial consultancy. They also provide VAT consultancy and Tax Auditing, which can be of great help to you. 

So to summarize, tax auditing is a process by which the FTA investigates your tax returns. They have the authority to tax audit your firm without any specific reason. You do have the right to check their identification. They provide you a scheduled time on which they arrive and carry their investigation. They can ask for any records they deem fit. You should keep both the original and copies of the records. You should make sure your tax issues and tax paid, both are documented properly. All the tax credit notes should be produced in front of the officers. Do an internal tax auditing beforehand. It’s prescribed to hire an external tax auditor because it has its benefits.

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