Tips to Consider While Conducting Tax Audit for your Firm in UAE: Tax is the prime source of income for any government. For that reason, each country has agencies authorized to monitor tax submitted by the companies. They monitor the earning of the business firm in each fiscal and calculate the tax to be levied.
The Federal Tax Authority (FTA) monitors tax-related transactions of the business firms located in the UAE. The internal tax audit is an essential part to preclude any kind of errors in tax calculations. We will be deliberating the tips while conducting a tax audit firm in the UAE.
Auditing of tax amount is of paramount importance to business organizations. The business firm has to pay the percentage stipulated by the government in the UAE from the earning in each fiscal. Failing which, the authorities can levy the organization with a hefty fine or revoke the license to continue the business. The firms in UAE institute internal audit to ascertain the accuracy of the tax calculations.
Every organization in the UAE has to tax auditors to monitor financial transactions and the accrued tax in each quarter. The team will be assessing the taxable income towards evaluating the tax amount. Let us see in detail, what is a tax audit, what are the tips while conducting tax audit for your firm in UAE and how can you prevent erroneous calculations.
Brief about Tax Audit
The FTA is authorized to conduct an audit of any business firm in the UAE to determine the business transactions and the profit gained. They can appear at the doorstep of the firm without any prior intimation. FTA will ask for all the financial documents concerning the company for inspection. None of the business firms in the UAE has the right to reject the provision of the financial documents sought by the FTA.
A firm in the UAE has to maintain all the documents related to financing all the time. It has to be up to date for submission to the agency, whenever they seek. Incomplete documentation can result in embarrassment to the organization and further investigation by the FTA.
What are the Documents to be Maintained?
All the ledgers and bills detailing the incomes and payables have to be maintained by the business firm. This will include the bills regarding import and export, money credit, documents stating the tax paid in the current fiscal and previous assessment years, and documentation regarding the loss.
The stringent regulations according to the federal laws in UAE, requisites the documents in original. Therefore, the document, ledger, and bills in the original have to be presented to the FTA team. The FTA will not accept any bill or document in duplicate during the tax audit.
Is your Firm Ready for the Tax Audit by the FTA in the UAE?
It is a question that worries many business organizations in the UAE. Even though each organization has a specialized team of professionals for monitoring the financial transactions and maintaining the ledgers/ bills. The personnel in the FTA is trained to analyze the financial transactions and extract even the smallest errors in the documentation.
To avert such an embarrassing situation, the business firms in the UAE conduct internal tax audits from time to time. It is pertinent to mention that, still inaccurate calculations regarding the financial transaction may remain. The FTA will be able to pinpoint the subject flaw during the tax audit. It will be better to hire a tax consultation agency to avoid such a situation.
Advantages of Assigning a Tax Consultation and Auditing Agency
A tax consultation and auditing agency will have professionals working under them. They will be having years of experience in undertaking tax audits and guiding business firms in following the best methods to calculate tax. With the support of an auditing and accounting agency, the firm can formulate a methodology for tax assessment.
Since the auditing and accounting agency is not directly involved in the business transactions, they will have a bird’s eye view of everything. The experts at the auditing agency will easily identify the loopholes in the financial documentation followed by the firm and advise accordingly.
Once the external accounting agency does the audit of your firm, you can be at ease regarding the tax audit by FTA in the UAE. In addition, the internal auditors at the organization can benefit from the auditing agency’s professionals, in learning advanced methods in assessing tax and undertaking calculations.
There are a bunch of auditing and accounting agencies in the UAE. They offer customer-oriented services, prepared according to the requirement of each business. The custom-tailored and budget-friendly services can help you to right-track your business transactions.