As we go into year 2019, VAT audits are expected to take place as per various media reports published in UAE and KSA.

Noting the short notice of 5 business days given before a VAT audit takes place, it is critical for companies to do a VAT health check to assess if they are in good shape to handle VAT audits conducted by Federal Tax Authority (“FTA”) in UAE and GAZT in KSA.

Some of the type of VAT Audits that may be conducted are below,

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• Refund Audits– These are currently taking place for any refund requests placed. Every refund audit is different and we have noted that the requirement from FTA change from company to company

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• De-Registration Audits– Companies trying to de-register from VAT have to go through the rigorous process of review from tax authorities. It is not as straight forward as it may appear and requirements change from company to company. We have witnessed that a very detailed review is conducted by tax authorities on VAT de-registrations.

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• Transaction Audits– These can be carried out based on analysis of tax authorities on the VAT returns submitted. Thus while filing VAT returns, companies are required to ensure proper backup and records are in place for providing information to tax authorities.

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• Special Audit– These are carried out to do a more detailed review of companies submitting VAT returns. The minimum period of keeping records from VAT Law perspective is 5 years, so during this period audits may be conducted. Based on our understanding on how it takes place in other countries, it is expected that audits are conducted for each company during the period of 5 years window available with tax authorities.

The early selection of a company for a VAT audit depends on various factors which is covered in our VAT Audit seminars. In case you like to participate in our seminars, please subscribe to our newsletter on our website or write directly at info@premier-brains.com

FTA powers

In UAE, Article 17 of Federal Law No. (7) of 2017 on Tax Procedures, give powers to FTA to conduct tax audits. Normally a 5 business days notice is given before conducting an audit and these audits can be conducted at company offices or at FTA offices. FTA may obtain or seize original records or copies, or take samples of the stock, equipment or other assets from the place at which the taxable person is subject to tax audit.

FTA also has the power to temporarily close the business for upto 72 hours to perform the tax audit and this time can be extended based on approval from Director General. These kind of audits are carried out without prior notice and in cases where FTA suspects of a tax evasion.

Tax laws also gives certain rights to taxable persons. Due to long nature of this discussion, we will cover this in our seminars.

There are various kind of penalties that maybe imposed based on tax audits, which can go upto imprisonment in case of tax evasions.

Premier Brains Seminars

Our seminars are conducted out of one of our value of “developing an atmosphere of continuous learning”. The session are expected to be based on practical case studies with open forum for discussion on various VAT related issues. In case you like to participate in our seminars, please subscribe to our newsletter on our website or write directly at info@premier-brains.com

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DISCLAIMER:

This document is only for information purposes and should not be construed as an advice. It does not necessarily cover each aspect of the topic with which it deals. You should not act upon the contents of this document without receiving formal advice on your particular circumstances.

If you would like to discuss any VAT matters or VAT services in Dubai& UAE, please drop us an email at info@premier-brains.com or call us at + 971 4 3542959.