M006, Omar Mohd Bin Dhaher Bldg, Al Qusais 1, Dubai, U.A.E.
+ 971 4 33393651
NAK Auditing L.L.C. provides VAT Audit Services in the UAE, which assists organizations to meet the requirements of the Federal Tax Authority (FTA) in totality. VAT audit is the intensive analysis of such tax returns, commercial records, invoices, and underlying transactions to confirm that the VAT has been reported and paid according to the UAE law—a comprehensive search of VAT returns, tax invoices and accounting records to detect misreporting or calculation mistakes.
Under proactive audit services, NAK Auditing L.L.C assists in minimizing risks of penalties, assists in timely and correct VAT filings and gives actionable information in an effort to protect your business against issues of non-compliance of VAT. Companies will have greater financial management and easy preparation for any FTA VAT audit.
As part of VAT audit services, we also make inquiries about your transactions to establish serious weaknesses in your VAT processing. The issues may be in Fame documentation of transactions, the maintenance of the appropriate accounts or verifying transactions. To have an easier time with the auditing by FTA in the UAE VAT audits, we scrutinize the issues and compile a report of the audit of VAT. In our VAT audit services of VAT, we have competent services that entail a critical review of the following:
1. Your books and records on accounting and bookkeeping.
2. Collection of VAT
3. VAT payments
4. Input tax claims
5. VAT returns filing
We examine and look into all your financial documents and activities where VAT is applicable. It also contains books of accounts, soft and hard copies of the papers of sales and purchases. This kind of checking provides the FTA with assurance regarding the punctuality of the business in terms of the collection and submission of VAT. Under our pre-audit services, you are also prepared for the formal VAT audits of FTA.
→You should take caution as regards the following:
1. Furthermore, expert help in the VAT audit of FTA in the UAE is going to result in a more efficient and expedited process. To ease your UAE VAT audits, we are on your side to furnish tax invoices, original documents, and financial records. Besides this, our VAT Compliance and VAT Advisor services are designed to keep you well in touch with all the VAT requirements and ensure that you correctly and on time file your VAT returns and in case of any problems that could be caused during an audit. It can be the planning of VAT, VAT registration, or VAT returns filing, but we guide you throughout the process.
2. In addition to the VAT, we also provide full tax compliance services and help your business comply with all local and international taxes. Our tax consultancy services offer professional advice to maximise your overall tax plan, risk management, and tax efficiency in all fields of taxation. Having all the tax services available, you are assured that your business is in good standing against any tax difficulties.
VAT audit is of significant interest to UAE businesses as it will ensure that the UAE businesses adhere to the rules and regulations of the UAE federal tax authority (FTA), VAT rules, thus ensuring that companies do not face the consequences of huge fines and penalties. It ensures that VAT has been computed, reported and paid properly and that any mistakes in VAT returns and invoices are identified and those mistakes rectified, and this minimizes financial risk. The proactive VAT audit or health checks enhance internal VAT operations, facilitate the functioning process, and create a favourable image among the regulatory bodies as well.
The essential reasons why VAT audits are significant to the UAE business involve:
⇒ Confirming compliance with the laws of the VAT through assessing all tax supplies and payment of VAT.
⇒ Eliminating the risk of expensive penalty charges because of wrong or delayed filing.
⇒ Determining possible savings in finances by revealing VAT overpayment areas.
⇒Enhancement of corporate transparency and accuracy in financial reporting that enables sound business decisions.
⇒ Training of businesses in terms of revenue criteria and compliance criteria to have mandatory audits by the FTA.
⇒ Assisting in keeping up-to-date VAT records and documentation to assist audit readiness.
⇒ Improving compliance with the FTA and stakeholders by means of compliance.
Altogether, VAT audit is not only a compliance audit but also an instrument of the optimization of VAT and the preservation of the financial health of a company in the context of the development of taxation in the United Arab Emirates.
1. Knowledge regarding Scope and Preparation: Firstly, it is necessary to know the scope of the VAT audit, i.e., what records and transactions are going to be reviewed. This entails the knowledge of areas of focus, which include taxable dealings, VAT invoices, input tax claims and VAT returns.
2. Having The Right Records: The businesses are required to have detailed, structured, and correct VAT records, including invoices, receipts, records of imports and exports, tax credit notes and accounting records, to provide all entries of VAT.
3. Pre-Audit Review: Do an internal audit review or simulated audit to determine any mistakes or inaccuracies in VAT records and filings. This assists in correcting the inaccuracies prior to the formal audit.
4. Compliance Verification: Check that taxes have been charged on taxable supplies, input tax claims are valid and documented and that zero-rated, exemption and reverse charge supplies are applied correctly.
5. Assess internal controls: review the internal controls of the firm in terms of VAT in an effort to establish any form of weaknesses that may result in noncompliance and take corrective actions.
6. Staff Training: Educate appropriate individuals on VAT rules and audit preparedness to ensure that every employee is conversant with the compliance requirement and their involvement in the audit process.
7. Co-ordination with FTA: Be in constant communication with FTA auditors, be responsive to their requests and open their records to make them available during the audit procedures.
8. Post-Audit Actions: Take any action on any findings or discrepancies reported by the auditors, take any adjustments, and ensure that any taxes or penalties incurred are paid punctually.
This all-inclusive method not only guarantees that the business will not run afoul of VAT regulations in the UAE but also enables the business to tighten the financial controls, as well as mitigate the possibility of paying expensive fines or getting into conflict with the tax authority.
⇒ FTA performs the VAT Audits in the UAE by its tax specialists. FTA is free to carry out VAT Audit as many times as possible any time of the year. The FTA tax auditors also evaluate the tax returns and any other documents of the entity, in addition to other concerning VAT information. Should they discover any errors, inadequacies, or inconsistencies, then they draw it to the attention of the entity.
⇒ The organization will have to rectify such mistakes, make appropriate records, and fulfill tax requirements.
⇒ FTA tax auditors may ask for your corrections to be re-audited. Thus, organizations need to gather all duties, pay to the government, pay all obligations, and keep records.
FTA-Ready Documentation Review in the UAE means the extensive preparation and planning of all the required tax-related documents to fulfil the high audit and compliance standards of the Federal Tax Authority (FTA). This would mean that a business is entirely ready to provide swift and precise answers to a VAT or tax audit.
→Some of the major features of FTA-ready documentation review are:
1. Complete Accounting: To keep detailed VAT and tax accounting records of taxes, including tax invoices, purchase invoices, credit/debit notes, bank statements, contact, board resolutions, and financial reports, is obligatory. These records should be true, and they should be in existence for at least seven years.
2. Accuracy and Consistency: Documents must be accurate and should be in line with financial statements, and should elaborate all taxable supplies, input tax claims and exemptions clearly. Any discrepancies can occasion audit risks.
3. Audit-Ready Format: The documentation should be easily accessible and should be prepared in a manner that it is easily submitted to the FTA, within stipulated deadlines, usually 30 days on request for an audit. This involves having a digital or physical record-keeping system.
4. Certain Documentation Items: This entails a tax registration certificate (TRN), a valid trade license, a breakdown of taxable and exempt income, transfer pricing documentation (where applicable) and documentation of VAT treatment of transaction.
5. Proactive Document Review: Internal reviews and Pre-audit reviews, as part of the regular internal checks, are used to detect and correct gaps or non-compliance-related issues before a formal audit by FTA.
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The UAE VAT Compliance Support and Remediation services assist companies with proper compliance with the Federal Tax Authority (FTA) VAT regulations and penalties, as well as streamlined tax processes. Such services are VAT registration, VAT returns filing, compliance audit, error identification and correction, and continuous compliance advisory services.
→The main aspects of VAT Compliance Support and Remediation in the UAE include:
1. VAT registration and filing returns: The professionals help companies in the registration of VAT on time, preparation and submission of VAT returns to the FTA, to avoid delays and errors in filing.
2. VAT Compliance Audits: After VAT transactions and records are audited regularly, inconsistencies within the documents and non-compliance risks, as well as lost VAT refunds, are detected.
3. Error Identification and Correction: Remediation operations assist in correcting VAT filing mistakes and amendments, as well as submitting correct information to the FTA within the required time.
4. Continued Advisory and Updates: The business gets updated on the changing VAT legislation, and expert advice on the changes that have impacted the VAT liabilities and compliance plans.
5. Record Keeping and Documentation: Assistance in keeping the required VAT records and audit-ready records to have an easy audit process by FTA.
6. Optimization of VAT processes: Advice on VAT process optimization to achieve the maximum amount of allowed refunds and minimize tax.
7. Audit Representation: The help with the audit of the FTA, communication with tax authorities, and defence of VAT positions of the business.
The major reasons why VAT audit specialists should partner with the company are:
1. Knowledge and Advice: VAT audit professionals have a good grasp of FTA norms and procedures that are accurate in advice, and ensure that the businesses comply with all the VAT requirements.
2. Risk Reduction: Professional audit professionals determine and eliminate risks of non-compliance, errors, or omissions in VAT filings that may result in fines or otherwise.
3. Effective VAT Administration: Skilled consultants simplify the process of VAT registration, filing of returns, record-keeping and audit preparedness, which saves on time and resources for the businesses.
4. Audit Preparation and Representation: VAT experts document the business in case of audit by FTA, prepare documentation, and represent businesses in case of audit or in case of dispute, safeguarding their interests.
5. Cost Savings: Experts can assist in minimizing the tax burden and increasing the cash flow by finding missed VAT recovery and optimization of compliance procedures.
6. Peace of mind: The businesses are assured that their VAT matters will be handled by competent personnel, thus enabling them to concentrate on the operations and growth that are central to their business.
On the whole, the collaboration with VAT audit specialists in the UAE will guarantee a high level of VAT compliance, minimize the operational risks and facilitate the strategic financial planning toward the success of the business in the long run.
Here are some common questions about VAT Audit Service.
1. VAT audits may be either random or mandatory.
2. Mandatory VAT audits are also used when a business exceeds the revenue limits (i.e. gross revenues exceeding AED 150 million per year), makes large VAT refund claims (more than AED 1 million), or has compliance concerns (i.e. failure to file VAT returns on time).
3. At the will of the FTA, any registered entity may be targeted by random audit.
→ The FTA issues a notice of scope, documents requested and timeframes.
→ The business also gives all the demanded VAT related documents, such as invoices, bank statements, and contracts.
→ On-site inspection can be done by the FTA to carry out further verification.
→ The FTA then makes a report after reviewing and outlines findings and adjustments as well as the penalties due.
→ Companies have to pay off fines and taxes.
The businesses must maintain comprehensive records of all the taxable supplies, imports, VAT returns, documentation of the supporting documents, and financial records. Failure to document may result in fines or audit inspection. More evidence can also be requested by the FTA.
→Late VAT return filings
→ Calculation of VAT done incorrectly.
→ Loss of invoices or supporting documents.
→ Incorrect VAT refund claims
→Failure to comply with changes of the VAT and time limits.
→Delayed submission of VAT: penalties begin with AED 10,000.
→ Miscalculated VAT: fines can be very high such as AED 50,000 to wrongly calculate exports.
→ Lacking or insufficient records: AED 5,000 fines in case of missing records.
→ False VAT refund applications: it is obliged to pay two times the amount of that which he claims and other fines.
→ Preparation and Enforcement.
→ Keep good and well-organized VAT records.
→Prepare correct and prompt VAT returns.
→ Carry out routine internal VAT audits.
→ Automate the process of VAT compliance with accounting software.
→ Get professional VAT consultancy (where necessary).
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