Since the introduction of corporate tax in the UAE, business owners have been keeping a closer eye on how they manage and report their finances. Federal Decree-Law No. 47 of 2022 affirms that proper accounts must be maintained and accurate tax returns filed with the Federal Tax Authority (FTA).
But compliance doesn’t stop there. The FTA can also audit your company to make sure your tax return truly reflects your financial activities. A tax audit is essentially a check-up to ensure everything you’ve reported is complete, consistent, and backed by evidence.
What Exactly Is a Corporate Tax Audit?
A corporate tax audit is an official review by the FTA to verify your company’s tax filings and financial records. The FTA may look at your books, invoices, contracts, and past returns to confirm that you’ve calculated and paid the right amount of tax.
Sometimes, companies are provided with a heads up, yet the FTA also conducts surprise audits if it suspects anything. That is why organizational and compliance at all times is crucial.
Is Audit Mandatory for Corporate Tax in the UAE?
The UAE does not require every company to be audited for tax annually. However, the FTA has the legal right to audit any registered entity whenever it wants, normally within a five-year period from the time of filing.
Even when you are not yet on the list for audit, you should always be prepared for an audit by keeping your accounts up to date, documented, and well recorded.
How to Stay Compliant with Corporate Tax Rules
To be problem-free and safe in case of an audit, make sure:
Keep complete books of accounts maintained in accordance with IFRS standards.
File your company tax return within nine months of the closure of your accounting year.
Keep receipts, invoices, and ledgers for at least seven years.
Get your filings internally or through a professional advisor reviewed.
Only deal with FTA-registered tax consultants or auditors.
These steps not only help you navigate an audit but also prevent your business from incurring unjustified fines.
What Happens During a Corporate Tax Audit?
Should your business be selected for scrutiny, the FTA will officially notify you. Auditors can:
Stop by your business location.
Examine your system of accounts and records.
Verify your claims of expenses, contracts, and invoices.
Hold interviews with finance staff or management.
After examination, the FTA releases a report. All good if you're in the right. Otherwise, you may be asked to correct filings, pay extra tax, or pay penalties.
What is the Penalty for Failure to Comply?
Failure to comply with UAE corporate tax can lead to:
Late filing fines.
Fines for false declarations.
Interest on the unpaid tax amount.
Temporary license suspension.
In extreme cases, the FTA can even hold back your company from making future submissions until compliance is restored. Good record keeping and timely filing can help avoid these sanctions.
Why Use a Corporate Tax Consultant?
Tax law in the UAE is yet in the developing stages, and professional guidance can be a game-changer. A trained corporate tax consultant helps you:
File your return accurately and on time.
Choose deductions or exemptions available.
Prepare FTA-compliant records.
Be ready for audits or FTA inspection.
At Tax Consultants in Dubai, we do it all from registration to reporting so you can focus on business operations without worrying about compliance errors.
Frequently Asked Questions (FAQs)
Require help with your next corporate tax audit or filing?
Our certified specialists at Tax Consultants in Dubai ensure your corporate tax in UAE compliance is prepared accurately and penalty-free. Call us now stay compliant and stress-free.
Mostafa is a seasoned Tax Consultant with over 5 years years of experience gained in diverse taxations matters. He has vast expertise in settling tax disputes with the Federal Tax Authority and handling of tax procedures in compliance with tax laws. He is adept in investigating underlying tax intricacies and offering expert tax advisory. He is also well-versed in conducting tax analysis’s and negotiations with the Tax Regulators, upon tax preparation and filing. Mostafa specializes in the areas of Tax law, Auditing, Accounting and Banking law.
