How Approved Auditors Perform a Tax Audit in UAE
Taxes are significant for the rustic functioning of an organization. The revenue from taxes is the continuing source for the growth and development of the country. Thus, a rustic organization must periodically conduct a tax audit for the varied businesses within the business environment. The tax audit helps the government to know if any company is holding tax fraud. It is the process by which the government tries to assess and analyze the responsibilities of business with regards to paying taxes. This process is conducted by the Federal Tax Authority and keeps a check on the timely payment of the tax by all the companies. This tax is ultimately submitted to the government which is employed to develop the economy and infrastructure of the corporate. Selecting an approved auditor simplifies the tax-audit proceedings. A tax audit is an examination for a business entity that's meant to uncover the fraud and inaccurate proceedings associated with tax and its filing. In Jan 2018, the UAE government initiated the proceedings of VAT in UAE. Now, consistent with the legal laws, the UAE established company must conduct the Tax Audit process to satisfy the stated rules. Being a core member of the business, one should remember the method of Tax Audit to urge clarity. Tax audit monitors the tax filings. The importance of accurate and timely VAT Filing during a tax audit.
- Avoids penalties
- Reimbursement of input tax
- Reimbursement of tax on import of goods through the Reverse Charge Mechanism
- Reduces or zeroes the risk of errors in VAT filing
- Increases the credibility of the business in the market and enhances the goodwill
Core Purpose of Tax Audit
A tax auditor decides on whether to conduct a tax audit process for a private or business entity. The core purposes of conducting a tax audit are to inspect: the business premises, documents available within the business premise. The assets are available within the business premise and the accounting methodology employed in the firms.
Pre-Tax Audit Proceedings
Before a tax-audit takes place, a business entity must make sure the following points:
- Adhere to the relevant tax laws
- Adopt the prescribed proceedings
- Update the Accounting and Bookkeeping records
- Proper retention of business documents
- Be handy with the VAT return filing records
In case if the above-stated requirements aren't met, relevant penalties are going to be applied to the taxpayer. Now, it must be understood that the business entity must choose a listed and registered tax agent for the audit process.
What is the method of Tax Audit?
A tax auditor follows the mentioned steps to while proceeding towards the Tax Audit process:
1. Notice of Tax Audit is obtained
The auditor obtains a pre-written consent from the concerned authority. FTA issues another permit for the auditor to enter the premise where the Audit process would be conducted, which might include information regarding:
- The Premise
- Parties Involved
- Date and Time of Audit
2. Commencement of Tax Audit
As per the rules, the tax auditor would access and review the financial books of the corporate. During, the auditor might request certain copies of the business records audited. It is a crucial point to notice that the law provides the business to look at the credentials of an auditor.
3. Completion of Tax Audit
The audit process is performed during the working hours and a clear report is submitted after the thorough inspection of the activities performed.
4. Audit Results Gets Drafted
Once completed, the relevant suggestions are drafted accordingly. This report contains:
- Penalties (if any)
- Audit rankings
It'll also provide guidelines for the business premise to figure and take the required steps accordingly. The Authority possesses the complete power to decide the re-audit process for the business entity.
CDA Auditing Services
CDA Tax Services in Dubai and UAE are tailor-made to meet the demands of our clients. We understand your business dealings, keep transparency in every process, manage to lower your expenses, and finally maximise your profit with better accounting and tax procedures. We visit our client’s office on a periodical basis and collect the necessary documents for VAT Return Filing. CDA offers:
- Better guidance and support for your VAT return in line with the provisions of the UAE VAT law
- Proper training to the employees
- Error-free VAT filing with proper back up of accounting
- Document the supporting documents related to each tax filing
- Help to have proper tax planning
Through our skilled team, we also provide quality consultancy services to the business world in the field of CFO Services, Auditing Services, Accounting & Bookkeeping Services, Due Diligence Services and Accounting Software Services in Dubai.
Our experts will give you one-hour free consultation to keep your uncertainties away!