Many business owners in the UAE overlook the importance of VAT audits until it’s too late. They assume that if they’re submitting VAT returns on time, everything is fine. But even minor mistakes or delays can trigger audits by the Federal Tax Authority (FTA).
To avoid surprises, every registered business in the UAE should be ready for a VAT audit, whether required by law or selected randomly. Even if it’s not mandatory for your company today, preparing like it is can protect you from risks and help build trust with authorities.
Let Tax Gian, one of the best VAT agents in the UAE, help you understand VAT audit and its implications on your business.
What is a VAT Audit?
A VAT audit is when the UAE’s Federal Tax Authority (FTA) checks a business’s VAT returns, records, and payments. The goal is to confirm that VAT was charged, reported, and paid correctly.
- The audit may involve checking:
- VAT returns
- Sales and purchase records
- Invoices and credit notes
- Financial statements
- Customs documents (for import/export businesses)
- Reconciliation of revenue as per books of accounts/trial balance with filed VAT returns
- Reconciliation with Trial Balance for revenue and other ledgers
- Verifying invoice and payment proofs
- There are two types of audits:
- Desk Audit: Done remotely. The FTA requests documents to review without visiting the business.
- Field Audit: Conducted onsite. FTA officials visit your office, inspect systems, and speak to your team.
When is a VAT Audit Required?
Businesses in the UAE can be audited at any time by the FTA. There are no certain criteria that mandate an audit. It totally depends on the FTA to audit a business whenever the authority believes its needed. Any business can be audited any time making it extremely important for businesses to remain audit-ready all the time.
Time Limit:
FTA can audit records from the past 5 years. In certain cases, this period extends to 9 years.
Common VAT Audit Triggers
- Inconsistent VAT return data
- Unusual or complex transactions
- Delays in responding to FTA queries
- Repeated failure to meet VAT deadlines
- High refund claims without clear support
Why Should Businesses Watch?
Getting audited doesn’t always mean trouble, but being unprepared can turn a simple check into a significant issue.
- Benefits of being audit-ready:
- Avoid unexpected fines
- Identify and fix mistakes early
- Speed up VAT refund processing
- Build a good track record with FTA
- Maintain clean and transparent records
VAT agents in Dubai can help you stay audit-ready.
How to Prepare for a VAT Audit in the UAE?
- Maintain Complete VAT Records
Keep all invoices, returns, tax credit notes, and supporting documents updated and organised. Always file documents based on FTA’s format and requirements.
- Review VAT Returns Regularly
Go back and check old returns. Make sure input and output VAT match your records. Fix errors before the FTA finds them.
- Use Reliable Accounting Software
Good accounting tools help you calculate VAT correctly, track invoices, and prepare reports with no errors. Make sure your software is updated.
- Train Your Team
Make sure your accounts department knows what documents to prepare and how to respond during an audit. Even external consultants should be informed.
- Simulate an Audit
Act like the FTA is coming. Review everything as if you’re being audited. This helps you spot problems early. You can also take help from VAT agents in the UAE for this purpose.
- Be Prepared
At the time of the FTA Audit, they will not give you time to search documents. They may ask you to submit bunch of information in 2 or 3 days. So be prepared and finish documentation before filing VAT Return each quarter/month.
What Happens During an FTA VAT Audit?
Step 1: Pre-Audit Notice
FTA sends a notice at least 5 days before the audit. It includes the schedule and what documents they need.
Step 2: Document Submission
You must provide all requested documents: VAT returns, ledgers, reconciliations, and sample transactions, on time.
Step 3: Audit Location
Depending on your business size and case, the audit can happen at your office or remotely.
Step 4: Review and Report
The FTA reviews the data and issues a report. If mistakes are found, you may have to pay unpaid VAT and penalties.
Step 5: Action After Audit
If you have any contradiction with the findings, you can simply file an objection with supporting documents. Make sure that it is done within the deadline. You can also take assistance from VAT agents in Dubai for this purpose.
How can Tax Gian Assist?
Keep your books orderly, regularly review your returns, and train your staff, all with the help of our expert tax agents in the UAE at Tax Gian. We help you always be ready because being ready isn’t only about avoiding legal consequences; it creates trust and helps your business to function smoothly. Our experts help you with tax situations so that you can focus on your business operations.
