What is meant by the VAT health check and its importance in UAE?
Every entity in UAE registered under VAT must ensure that it follows all the VAT laws laid out by the FTA. The FTA may, at frequent intervals, conduct audits and examine the tax structure and payments of a firm. If a firm is found to be in default of the law, then it may be charged with huge penalties. But the firms can ensure that they are on the same page concerning the VAT law by conducting VAT health checks through experienced VAT consultants like CDA in UAE.
What is meant by a VAT health check?
It is the responsibility of each taxpayer in the UAE to file the VAT returns on time and accurately. They must ensure compliance and check if the VAT procedures are in order. The VAT health check is a process in which an independent review of the VAT procedure and structure is conducted and evaluated to see if it's up to the mark and done in the correct manner. It is mainly conducted by an independent professional VAT consultant who is well aware of the VAT laws. Conducting a VAT health check can help firms avoid huge penalties from authorities like the FTA.
You can also read: How is VAT implemented on Electronics Services in the UAE?
The pivotal role of the VAT health check in UAE
The VAT health check is an important process through which the firms in UAE can detect any mistakes or errors in the VAT procedure or VAT return filing in Dubai at the earliest possible time before the FTA detects them, and they can also be protected from huge fines. Some more important aspects of the VAT health check are listed below:
- VAT health checks can assist businesses in ensuring that their transactions are in accordance with VAT law.
- A VAT health check can evaluate the effectiveness of the VAT control procedures implemented by the firm.
- Detect errors beforehand and take corrective measures regarding VAT compliance and return filing activities.
- Helping the firms keep all the records related to VAT up-to-date and preparing the firm for FTA audits
- Ensuring proper calculation of the VAT charged on the goods or services and maintaining accurate records of the transactions.
- Ensuring reconciliation of accounts and VAT records.
- Ensure that there is no tax evasion and that accurate tax returns are submitted on time.
- VAT health checks can assist firms in availing eligible VAT return refunds by maintaining accurate records of VAT collection and payment.
- Ensuring that VAT is charged accurately in different scenarios and as per laws applicable for different zones in UAE.
What are the activities involved in VAT health checks in UAE?
The activities and processes involved in VAT health checks conducted by professional tax consultants like CDA in UAE include the following:
- Assessment of accounting records and the VAT records maintained by the firm and ensuring their reconciliation.
- Reviewing the VAT return filing, ensuring its timely filing, and detecting errors if any
- Conducting an evaluation of VAT documents and financial records and cross-checking the accuracy of each transaction
- Ensuring administrative compliance by verifying the documents uploaded in the FTA portal regarding VAT registration, filing, etc. with the actual documents of the firm and making any updates if required.
- Maintaining all the important VAT records that may be required when the FTA conducts any audit.
- Identifying available opportunities related to VAT
- ensuring that VAT invoices are produced in the correct format in accordance with VAT laws
- Ascertaining the correct input and output VAT amounts
- Choosing and implementing an effective VAT accounting strategy within the firm can improve the VAT compliance structure of the firm.
You can also read: How is VAT implemented on services received in designated zones in UAE?
Why should firms in UAE conduct VAT health checks?
Just as we go to doctors for a personal health check-up to ensure our healthiness and to detect any disease at an early stage, a VAT health checkup for firms in the UAE from professional VAT consultants may provide details regarding compliance and correctness of VAT procedures, as well as aid in the detection of any mistakes. Even though conducting a VAT health check is optional, it can provide you with peace of mind regarding the VAT activities of your business in UAE.
Why choose CDA for the VAT health check in UAE?
CDA has been providing professional tax consultancy services to its clients for more than a decade, which has made it one of the leading accounting and auditing firms across the UAE. CDA, with its competent and professional team of experts, is well-versed in providing all kinds of VAT-related services along with accounting and auditing activities as per their requirements. Choosing CDA for your firm's VAT health check would be a good approach, as we provide custom-tailored and personalized services to our clients so that they can get solutions for all the troubles faced by them. To know more contact us now.