The Federal Tax Authority's TAX Audit Process
Despite the fact that the FTA does not require a specific reason to conduct tax audits in the UAE, the Authority typically sends a notice to the taxable person or business at least five days before the scheduled date, as per Article 17 of the Tax Procedures Law. A tax audit is normally conducted during the FTA's normal working hours, according to Article 19 of the Tax Procedures Law. However, in exceptional circumstances, the FTA Director-General may authorize tax audits outside of the Authority's working hours.
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In the UAE, records must be kept for tax audits.
Taxable entities are required to keep certain records in order to facilitate tax audits. Article (78) of the Federal Decree-Law on Value Added Tax requires tax registrants to keep and present the following records to the tax auditor during the audit:
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Records of all supplies & imports
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Tax invoices and documents related to receiving goods & services
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All tax credit notes and documents received
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All tax invoices and documents issued
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Records of goods and services that were disposed of for matters unrelated to business and records showing tax paid to the same
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Records of Goods and Services purchased and for which the Input Tax was not deducted.
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Records of exported Goods and Services.
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Records of adjustments or corrections made to accounts or Tax Invoices.
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Details of Goods imported along with Customs declarations and Supplier Invoices
Tax Auditors' Rights and Powers in the UAE
Tax auditors have the following rights and powers, according to Chapter 2 of Federal Decree-Law No. 7 of 2017 on Tax Procedures and Title 8 of Cabinet Decision No. (36) of 2017 on the Executive Regulation of Federal Law No. (7) of 2017 on Tax Procedures: ​
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1. Right to Enter Premises - Tax auditors in the UAE have the authority to enter any place where the person subject to the audit conducts business, stores goods, or keeps records, according to Article 18 of the Tax Procedures Law. If tax evasion or any potential hindrance to the tax audit is suspected, the auditor may temporarily shut down the location in question for up to 72 hours to perform the audit without prior notice.
2. Right to Obtain, Seize Asset - A tax auditor has the right to inspect original records and copies of records under Article 18 of the Tax Procedures Law. The UAE tax auditor has the authority to take samples of stock, equipment, or other assets from the location where the person being audited conducts business. If necessary, the auditor has the authority to seize samples of stocks, equipment, or assets. ​
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3. Right to Audit - New Information A tax auditor can audit any new information discovered during the tax audit that may have an impact on the audit's outcome. However, this is only done if the procedures follow the Tax Procedures Law and the Executive Regulations of the Tax Law.
Notification of the Tax Audit Results
According to Article 17 of the Tax Procedures Law, the FTA will notify the businesses subject to Tax Audit about the final results of the Tax Audit within 10 business days of the audit's completion. Businesses subjected to a tax audit in the UAE are permitted to view or obtain the documents and data on which the FTA based its assessment of Due Tax. This business right is enshrined in Article 17 of the Tax Procedures Law.
Always Hire FTA Registered Tax Agents
The FTA audits tax registrants in the UAE to ensure that they are in compliance with the VAT Law, Excise Tax Law, and other tax regulations. Because the FTA conducts the tax audit, businesses require the expert assistance of registered tax agents in Dubai, such as Capella Tax Consultancy L.L.C, who assist them in preparing for the audit..
