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Why Tax Audit? • Failing to submit a Tax return within the timeframe specified by the
VAT Law.

Tax Audit is one of the compliance checks to verify a person’s VAT liability • Failing to settle the payable tax stated as such on the Vax return that
is correct by way of examining various records which are maintained by the was submitted within the time limit specified by the Tax Law.
taxpayer. A tax audit may be carried out at the taxable person’s business • Submitting an incorrect VAT return.
premises known as ‘field tax audit’ or in the offices of the FTA. Generally,
prior notification of an audit will be given to the taxpayer. • The Registrant failing to account for Tax on behalf of another person
Why Tax Audit? when he is obligated to do so under the Tax Law
VAT is a self-assessment tax, meaning the taxpayer himself assesses the • The shortfall in VAT payable as a result of a tax evasion
amount of tax payable and recoverable input tax based on the supplies Also, there could also be administrative penalties levied on the taxpayers if
done during the period and reports it to the FTA through VAT returns. the findings lead to those instances specified in the law
To assess whether the self-declaration is correct or not, the tax audit
procedure is used by the FTA. How tax compliance is key in businesses and how TallyPrime ensures a
100% tax compliance?
During the audit, if there are some discrepancies resulting into
underpayment of the VAT or over claiming the input VAT deduction, the Tally aims at providing best business solutions for seamless growth.
FTA will issue a notice in the form of assessment asking the taxpayer to pay Simplifying generation of business reports is what we vouch and live by
the VAT along with penalties. our mantra of ‘Designed for You’. We believe in the power of technology to
make business owners efficient, empowered and happier, so they can focus
What is the timeline for Tax Audit? on what matters most for their business.
All the VAT registered businesses will not be audited and there is no
fixed frequency in which the tax audit will be conducted. FTA will select • We have done over 300 VAT awareness sessions since the
the businesses who require to be audited and the decision to audit the introduction of VAT in UAE. These events were conducted across
businesses is at FTA’s discretion. The following are some of the factors UAE in various Emirates – Dubai, Sharjah, Ajman, Abu Dhabi,
which are considered in selecting the business for tax audit. Fujairah, Ras Al Khaimah with over 13,000+ attendees. These VAT
• How large or complex the business awareness events are conducted whenever any updates around VAT
or any other compliance are introduced by the government, such as
• Past compliance history of the business we have ESR as new regulation.
• The tendency of late submission of returns • Since covid-19 has disrupted most of the small businesses and
• Instances of incorrect return filing and so on. has had a huge impact in the way organisations operate, we have
been conducting these events on virtual platforms through digital
For example, a large business selling a high volume of goods and having webinars. Most knowledge & awareness sessions are conducted in
a poor compliance record is more likely to be subject to a tax audit than
a small business with a strong compliance record, as the risk to the tax association with a VAT expert/CA/Tax Agent etc, who is a subject
matter expert. With Tally’s remote capability feature, clarifications
revenue is greater.
and verifications become a seamless activity as CAs can provide
Tax Audit Procedure assistance to their clients, from anywhere, anytime with complete
The FTA will usually inform the taxable person in question, five business data security.
days in advance. However, in certain exceptional cases like suspected tax • Over 13K businesses have benefited from our VAT related initiatives.
evasion, or if there is a reason to believe that notifying would hinder the These are the people who have attended our sessions and benefited
conduct of the audit, no notice of tax audit will be given. on key areas, such as –
Tax Audit will be conducted at the taxable person’s place of business or in • Understand the concept
some cases at FTA’s office. If the audit takes place at the taxable person’s • VAT Law in GCC
place of business, it will usually be during the FTA’s normal business hours.
• Its Implications
The businesses which are subject to an audit (including their tax agent, or
legal representative), must facilitate and provide the required assistance • Connected such businesses with VAT experts for (VAT
to the tax auditor to carry out the audit in a smooth manner. The following Impact Assessment Study, Trainings, Return Filing)
are some of the actions that the taxpayer should ensure on receiving the Majorly we conduct all VAT events under “Tally For VAT” which focus on
tax audit notice. creating more and more awareness on VAT-related updates, benefitting
• Relevant premises are accessible; various business owners from different sectors. Tally also produced a
series of episodes called “Let’s Talk VAT” with CA Manu Nair, which was
• Tax records such as books of accounts, Tax invoices etc. are accessible covered for Bahrain.
for examination • We are accredited by the Tax Authorities in the region, FTA in UAE
and GAZT in Saudi Arabia and also gave region a product which
• Relevant staff are present (for example the person responsible for
compiling the tax return) supports bilingual (English & Arabic) VAT Returns.
• We have given/added 40+ important VAT updates in our product since
• Original copies of documents or invoices the introduction. To ensure that our existing customers stay updated
with all the latest enhancements, we conducted free workshops for
In the event of failure to provide the required records or assistance in product update awareness, and simultaneously communicated the
conducting the tax audit, applicable penalties may be levied on the changes through release notes, emailers etc.
taxpayer.
On completion of the audit, the FTA will communicate the results of the
audit to the taxable person. If the conclusion of the audit leads to the
determination of any of the following cases, then tax assessment will be
issued.
• Failing to apply for registration within the timeframe specified by
the VAT Law.
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