Tax Audits

Corporate Tax Audits in the UAE: How to Stay Compliant

Q: Is audit mandatory in the UAE for corporate tax?

No. Corporate tax audits are not mandatory annually for all businesses, but the FTA can audit any registered entity at any time within the allowed period. All companies must maintain complete and accurate records to stay prepared.

Q: How do I minimize my corporate tax legally?

Businesses can reduce their corporate tax by claiming allowable deductions, loss carry-forward benefits, and exemptions permitted under the UAE Corporate Tax Law.

Q: How do I prepare for an audit of my corporate tax?

Ensure your financial statements are accurate, retain supporting documents, maintain IFRS-compliant accounts, and work with an FTA-approved tax agent for proper audit preparation.

Q: Who regulates auditors in the UAE?

Auditors in the UAE are regulated by the Ministry of Economy (MOE), while the Federal Tax Authority oversees compliance with tax laws and audit requirements.

Q: Who is responsible for ensuring audit compliance?

Company management or business owners are responsible for audit compliance, even if they outsource bookkeeping, accounting, or tax filing to consultants.

Q: How often should a business change auditors?

There is no mandatory rule, but many businesses change auditors every few years to maintain independence and transparency.

Q: How long must I retain financial and tax records?

Under UAE Corporate Tax Law, businesses must retain all relevant accounting and tax records for at least seven years from the end of the tax period.

Q: What happens if I fail an FTA audit?

If errors are found during an audit, the FTA may impose additional tax assessments, penalties, or interest. Immediate correction and proper compliance can reduce risk.

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)

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Ensure accuracy in your financial statements, retain all bills, and communicate with an FTA-approved tax agent who is knowledgeable about audit requirements.

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You can reduce your tax by claiming allowable deductions, loss carry forwards, and claiming exemptions under the UAE Corporate Tax Law..

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Ensure accuracy in your financial statements, retain all bills, and communicate with an FTA-approved tax agent who is knowledgeable about audit requirements.

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[wp-accordion title='Who regulates auditors in the UAE?' load_css_js='true' active='true' ]

The Ministry of Economy (MOE) oversees auditors, while the Federal Tax Authority ensures tax compliance.

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Company management or owners are responsible first and foremost, even if they outsource the task to accountants or consultants.

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No hard and fast rule, but the majority change auditors every few years in order to maintain independence and openness.

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The UAE Corporate Tax Law requires businesses to retain records for at least seven years from the end of the tax year.

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If the FTA identifies errors, you can be asked to pay outstanding taxes plus penalties or interest. Correcting errors upfront prevents the greatest damage.

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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.

Speak to a Tax Expert

Mostafa Mansour

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.