Page 28 - Focus Group

TAX AUDIT

CA Chirag Agarwal

Tax Audit is one of the required to be audited. Generally, the Tax Authorities
compliance checks to verify a uses computer algorithms to identify the returns to
person’s VAT liability is correct be audited. The decision to audit the businesses
by way of examining various completely is at AUTHORITIES’s discretion.
records which are maintained
by the taxpayer. A tax audit may be carried out at Tax Audit Process
the taxable person’s business premises known as Notice of Tax Audit shall be sent by Tax Compliance
‘field tax audit’ or in the offices of the AUTHORITIES. and Enforcement Department to the Taxable Person
Generally, prior notification of an audit will be given by email to furnish the documents and information
to the taxpayer. within 5 business days. Initially following 2
documents shall be asked to be provided by the
Let us understand Why Tax Audit in UAE? And the
process involved in the Tax Audit. Taxable Person:

Why Tax Audit? 1. Audit Information Request File for each tax
period
VAT is a self-assessment tax, meaning the taxpayer
himself assess the amount of tax payable and 2. Trial Balance for each tax period
recoverable input tax based on the supplies done Audit Information request consists of following
during the period and reports it to the AUTHORITIES information to be furnished to AUTHORITIES for
through VAT returns. In order to assess the self- each tax period:
assessed declaration is correct or not, the tax audit
procedure is used by the AUTHORITIES. 1. Sales and other outputs subject to the standard
rate of VAT (5%): Box (1)
During the audit, if there are some discrepancies
resulting into underpayment of the VAT or over 2. Sales and other outputs subject to the zero rate
claiming the input VAT deduction, the AUTHORITIES of VAT (0%): Box (4)
will issue a notice in the form of assessment asking 3. Sales and other outputs exempt from VAT: Box
the taxpayer to pay the VAT along with penalties. (5)
What is the timeline for Tax Audit? 4. Sales and other outputs outside the scope of

All the VAT registered businesses will not be audited VAT: No disclosures in VAT Return
and also there is no fixed frequency in which the 5. Purchases subject to the standard rate of VAT
tax audit will be conducted. From time to time, the (5%): Box (9)
AUTHORITIES will select the businesses who are

28 TAX JOURNAL 2020 The Institute of Chartered Accountants of India (Dubai) Chapter NPIO