Every business in UAE registered under VAT needs to ensure that it must follow every VAT law laid out by the FTA. If any firm is found to be in default of the law, then it must be charged with penalties. The companies must ensure that they are on the same page concerning the VAT law by having VAT health checked via VAT consultants in UAE.
What is a VAT health check?
A VAT health check is an individual review by any expert VAT consultant to measure the creativity of the VAT procedures, control practice and documentation. Any VAT health check has a review of VAT returns, maintenance of tax records, transactional analysis of the existing transaction, documentation format, and key compliance areas of high risk.
FTA officials have a VAT audit regularly to different companies in UAE. If the FTA auditors found a mistake in the VAT, they may impose a fine.
How to conduct a VAT health check
Any VAT health check is organized by first independently examining the client’s tax filing to get a fair or true view of the business. After which, if there are any queries, they need to put them in front of the clients. After collecting all the present and past information, a thorough file is undertaken on the accounting records, the tax liabilities, the calculations, tax compliance, and tax records.
It is recommended that companies to undertaken tax compliance and the controls thereon and identify the financial and administrative deficiencies in the company so same could be rectified before tax audit from FTA.
The necessity of vat health check in UAE
VAT returns have to be complete and in full compliance with the UAE VAT laws. The FTA could exercise their power to conduct an audit of certain tax registrants to make sure compliance with VAT regulations and laws.
To ensure the tax records, procedures and recording are in line with the UAE VAT laws, a registrant must conduct a tax health check to enhance areas where control and compliance have to be straightened and avoid any chances of error in future.
A first-class health check would identify the areas where attention is mandatory. Corrective actions must be mapped out to stop the non-compliance and remove the occurrence of any non-compliance. By having a proper health check a company could ensure improvement in compliance with VAT regulations and laws.
FTA may start auditing after informing the registrant by mentioning a notice. Based on the industry in which the business is categorized and the local business practice.
Is a VAT health check in the UAE compulsory?
It is not necessary to have a VAT health check in the UAE. But, it is recommended to make sure you are on the correct side of the VAT law. You may even compare it to the person visiting a doctor for a periodic health check to assure themselves that their body is functioning normally.
Benefits of VAT health check in UAE
There are several advantages of the VAT health check in the UAE. The company would avoid every kind of VAT fine from FTA after having a complete VAT health check process.
- VAT planning
- VAT compliance in any operations of the company
- Ensure the effectiveness of the control implemented by a tax-registered entity
- VAT-compliant documentation and taking corrective actions
- Preparing company for FTA audits and answers to FTA questions if necessary.
- Avoidance from VAT fines
- Assure regular VAT submissions
- Assurance of the accuracy of VAT calculations.
Role of VAT health check in UAE
It is one of the necessary processes by which the company in UAE could detect any mistake in the VAT procedure at the earliest possible time before FTA detects them, and they could also be protected from several fines.
- VAT health checks could assist companies in ensuring the transaction are by VAT law.
- A VAT health check could evaluate the effectiveness of the VAT control methods implemented by the company.
- Helps the Company to record everything related to VAT preparation and up-to-date the firm for FTA audits.
- Ensure reconciliation of VAT records and accounts.