Paying value-added tax is one of the most important responsibilities of the business entities and the public in the United Arab Emirates. They have to follow the conditions devised by the federal tax authority, fulfill all the requirements of filing for VAT, calculating the threshold, and filing for VAT return to get done with their responsibility.
The miscalculation of the process or any other issues in it, do not only expose the parties to penalties and fines but also paves the way for a tax audit. Tax audit is also one of the most dreaded activity for business owners. It does not only waste their precious time and resources but also hurt their reputation in the market. Therefore, they try their best to avoid it.
This article will provide you a brief guide to avoid tax audits in the United Arab Emirates and ensure the progressive profitability of your business.
Top 5 Points to Remember to Avoid Tax Audit
The business owners feel a sense of relief after successfully paying value-added tax. However, their relief goes down the drain if they receive the notice of a tax audit. It mostly occurs due to the reason that the tax amount is not calculated properly and there have been errors in tax payment. So, the officials need to check the business books if you are right in your claim or have committed some mistake or fraud. It can be avoided by tending the books properly.
The following are some of the most important points that you should remember to avoid tax audits in the UAE.
1. Know Audit Targets
The very point that can save you from a tax audit is to know the targets of the audit. Total sales, total purchases, input VAT, output VAT, and payable tax are the most important categories of the audit.
You need to pay complete attention to these points while calculating and paying tax in the initial phases. In such away, you can check the errors and fix them which will help you avoid facing tax audits later. Most of the businesses acquire the help of the VAT consultancy agency to look after critical matters and fulfill all the tax requirements to avoid any issue.
2. Offer Explanations
The second point to remember in order to avoid a tax audit is to offer an explanation to the authorities before they bring the audit notice to your door. For example, if there is a huge gap between your present and previous return filings, you can offer proof of business activities.
You can share the business documents, receipts, and other records to show the boom or poor activity of your business that affects the VAT returns. It will not only help the authorities be aware of the condition of your business but also save you from the additional hassle of the tax audit.
3. Consider Rechecking
Another important point which you should remember always and not just in the case of avoiding a tax audit is to recheck your claims, accounts, and other documents. Make it your practice to double-check all the business dealings in order to fix the doubt of error.
Do not think that you deal with on a routine basis, so you cannot commit any mistake. Dealing with numbers can become tricky at any point of time and make your face unimaginable hurdles. So, there is no harm in double-checking earlier, instead of paying fines later.
4. Avoid Filing Form Corrections
One of the gravest mistakes committed by the business authorities which serves like inviting tax audit authorities is filing form corrections. The businesses do not file the form correctly and then request for amendments multiple times.
All of this leaves a negative impression on the federal tax authority and makes them pursue a tax audit to uncover the discrepancies. So, fill out the forms carefully and avoid filing form corrections at every cost.
5. Be Sure of Filing Dates
Another important thing to remember besides filing the form correctly is to be sure of the filing dates. Do not forget the due date and try to complete all the process and file before the due date if possible.
You may be engrossed in business dealings and miss the due date, or the details of filing which can invite tax audit. It is much better to involve professionals. You can hire the service of the best VAT consultancy in Dubai and let the professionals deal with all legal requirements and conditions smoothly.
Avoid tax audit to boost your business profit!
A tax audit can not only add loss to your business but also impact your reputation in the market. It can impact your business relations and make the third parties do not deal with you. a little error on your behalf can give rise to such grater issues.
So, do not indulge in the blame game but try to consult the professionals before it’s too late. You can ensure to manage all your accounts, as well as fulfill tax requirements efficiently with the support of skilled and experienced professionals.