Articles 17 to 23 of the UAE TAX PROCEDURES LAW deal with Tax Audit by the Federal Tax Authority of UAE.
Title 8 – Article 11 toArticle 19 of the Executive Regulation of Tax Procedures Law also deals with Tax Audit.
1. What is a Tax Audit under UAE Tax Procedures Law?
The Executive Regulation to UAE Tax Procedures Law defines Tax Audit to mean “A procedure undertaken by the Authority to inspect the commercial records or any information or data related to a Person conducting Business”.
2.1. Who may perform Tax Audit under UAE Tax Procedures Law?
The Federal Tax Authority of UAE has the authority to perform Tax Audit under Article 17 of the UAE Tax Procedures Law.
2.2. What is the purpose to perform Tax Audit?
To verify the extent of the Person’s (subjected to Tax Audit) compliance with the provisions of the Tax Procedures Law and the Tax Law (includes VAT Law and Excise Tax Law).
3. Where may the Tax Audit be performed.
The Tax Audit may be performed at :
(a) The offices of the Federal Tax Authority, or
(b) The place of business of the Person subject to the Tax Audit or any other place where such Person conducts Business, stores goods or keeps records.
4. What is the period of intimation for Tax Audit?
The Federal Tax Authority shall inform the person subjected to Tax Audit at least five business days prior to the Tax Audit, if the Tax Audit is performed at the place of Business of the Person subject to the Tax Audit or any other place where such Person conducts his Business, stores goods or keeps records.
5. What is the temporary closure of place of business?
The place of Business of the Person subject to the Tax Audit or any other place where such Person conducts his Business, stores goods or keeps records will be temporarily closed in order to perform the Tax Audit for a period not exceeding 72 hours without prior notice in any of the following cases:
(a) If the Authority has serious grounds to believe that the Person subject to the Tax Audit is participating or involved in Tax Evasion in respect to this Person or another Person;
(b) If the Authority has serious grounds to believe that not temporarily closing the place where the Tax Audit is conducted will hinder the conduct of the Tax Audit;
The Tax Auditor shall obtain the prior written consent of the Director-General; and if the place to be accessed is a place of residence, then a permit from the Public Prosecutor shall also be obtained.
Places closed under this Article shall be reopened after the lapse of 72 hours, unless the Federal Tax Authority obtains a permit from the Public Prosecutor to extend the closure period for a similar period prior to the expiry of the preceding 72 hours.
6. What are the powers of the Tax Auditor during Tax Audit?
According to Article 17, The Tax Auditor has the right of entry to any place where the Person subject to the Tax Audit conducts his Business, stores goods, or keeps records.
According to Article 18, while conducting a Tax Audit, the Tax Auditor
(a) may obtain the original records or copies thereof, or
(b) take samples of the stock, equipment or other assets from the place at which the Person subject to the Tax Audit conducts his business or which are in his possession, or
(c) may seize them in accordance with the rules that shall be specified in the Executive Regulation of this Law.
7. What are times during which a Tax Audit may be conducted?
According to Article 19,
(a) A Tax Audit will be conducted during the official working hours of the Authority.
(b) However, in case of necessity a Tax Audit may be exceptionally conducted outside of these times by a decision of the Director-General.
8. What happens if new information surfaces after a Tax audit?
According to Article 20, The Authority may audit any issue previously audited if new information that might impact the outcome of the Tax Audit surfaces, provided that the Tax Audit procedures apply in accordance with the provisions of the Tax Procedures Law and its Executive Regulation.
9. What are the obligations of a person subject to Tax Audit?
According to Article 21, a Person subject to a Tax Audit, his Tax Agent or Legal Representative shall facilitate and offer assistance to the Tax Auditor to enable him to perform his duties.
10. What are the rights of a person subjected to Tax Audit?
According to Article 22, the person subject to tax audit shall have the right to:
(a) Request the Tax Auditors to show their job identification cards.
(b) Obtain a copy of the Tax Audit Notification.
(c) Attend the Tax Audit which takes place outside the Authority.
(d) Obtain copies of any original paper or digital documents seized or obtained by the Authority during the Tax Audit, according to what is specified in the Executive Regulation of the Tax Procedures Law.
11. When will the results of the Tax Audit be notified to the person subject to Tax Audit?
According to Clause (1) of Article 23, the Federal Tax Authority shall inform the Person subject to Tax Audit of the final results of the Tax Audit within the time limit (10 business days from the end of the audit -Article 17(1) of the Executive Regulation ) and according to the procedures specified in the Executive Regulation of the Tax Procedures Law.
12. Does the person subject to Tax Audit have the right to know the basis of assessment of due tax?
According to Clause (2) of Article 23, the Person subject to the Tax Audit may view or obtain the documents and data on which the Federal Tax Authority based its assessment of Due Tax according to the provisions specified in the Article 17(2) of the Executive Regulation of the UAE Tax Procedures Law.
The person subjected to Tax Audit in notification of results of Tax Audit may request the Federal Tax Authority to view or obtain Documents and data on which the Authority based the assessment of Due Tax. Such request shall be made in writing or through such other form adopted by the Authority within (20) business days from the date of the notice provided by the Authority, and shall provide the requested information within (10) business days in the following manner:
a. A paper or electronic copy of the Document or data requested.
b. The original Document or data requested if such Documents or data belong to the Person subject to the Tax Audit who made the request.
The Authority is not required to provide:
a. Documents or data which would reveal internal correspondence or decisions made by the Authority.
b. Any confidential information or data related to any other Person or Persons.
c. Any Documents or data, which are known to be in possession of the Person, who is subject to the Tax Audit and made the request. In this case, the Authority shall provide the Person subject to the Tax Audit with sufficient information to enable him to identify the Documents and data requested.