VAT AUDIT READINESS
According to the Federal Decree Law no 7 issued by the Ministry of Finance defines Tax Audit as a procedure undertaken by the Authority to inspect the commercial records or any information or data related to a Person conducting Business.
A tax audit is the review of an organization’s role as a taxable entity by the government. The objective of the Audit is to ensure that the tax liability is correctly ascertained, is paid correctly and tax due is collected and submitted to the government within the stipulated time.
WHY DO BUSINESSES NEED VAT HEALTH CHECK?
It is expected that over time most entities registered for VAT will be subject to an FTA VAT Audit. Non-compliance with tax laws is likely to result in penalties and loss of reputation. There are various challenges that organizations face with regards to VAT Audit
- Lack of System/ technological advancement to drive processes
- Lack of awareness on VAT impact on transaction
- Non availability of qualified VAT personnel
- Human errors and negligence
- Ensuring Prescribed processes
- Ensuring maintenance of records as required by law
- Timely accurate filing of returns
That is why, businesses need specialized professionals to assess, advise and execute VAT Audit Readiness to ensure that there are no last-minute surprises
VAT TAX AUDIT
- FTA can conduct tax audit at its discretion after giving 5 business days’ notice in advance. However, in certain exceptional cases if there is a reason to believe that notifying would hinder the conduct of the audit, no notice of tax audit will be given.
- The notice indicates to the business the Audit schedule, place of assessment, parties involved, etc.
- The business which are subject to audit will be required to provide access to premises, access to records and documents relevant for audit and all other support as required for the smooth functioning of audit.
- The audit will be carried out during the official working hours of the FTA unless on account of exceptional reasons.
- On completion of the audit, FTA will issue the report along with observations on violations, if any and the penalties to be paid.
OUR METHODOLOGY
At Squarecut Consultancy, we adopt a 4-prong approach with VAT Health Check
PLANNING
- Understanding the business model and organization structure
- Review of system and process flow to ensure compliance to UAE VAT laws and international standards
EXECUTION
- Reviewing VAT returns to ensure proper filing as per the law
- Ensuring revenue recognition as per IFRS and reporting
- Reconciliation of ledgers
- Quantitative and qualitative review of documentation in order to assess the financial impact
VETTING
- Identifying cases of non-compliance with UAE VAT Law
- Studying and highlighting the impact of cases
- Reconciliation of ledgers
REPORTING
- Preparation and submission of a detailed report with findings, suggestions and recommendations vis a vis objective set forth
VAT Audit preparedness and compliance can be a long drawn and tedious process for many businesses From ensuring documentation requirements and filing as per the FTA guidelines, reviewing them to ensure adherence to the process and administrative requirements and their completeness, to delivering FAQs and training material for staff, Squarecut Consultancy offers end to end service to make your business ‘VAT AUDIT READY”