UAE Tax Audit Services
14/09/2026
YOUNG AND RIGHT ACCOUNTING & TAX CONSULTANCY
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Businesses dealing with excise goods in the UAE have specific tax compliance responsibilities, including registration, record keeping, tax return filing, payment and maintaining accurate information about excise goods. An Excise Tax Audit UAE may involve the Federal Tax Authority (FTA) reviewing a taxable person's records, transactions, stock, tax returns and other information to determine whether the correct Excise Tax has been accounted for.
Excise Tax can be particularly important for businesses involved in the import, production, stockpiling or release of excise goods from designated zones. The FTA confirms that persons engaged in these activities may have Excise Tax registration obligations.
Professional Excise Tax Audit Support can help businesses identify potential compliance issues, reconcile records and prepare the documentation required for an FTA review. Young and Right can support UAE businesses with Excise Tax reviews, accounting records, reconciliation and audit preparation.
An Excise Tax audit is a review conducted by the Federal Tax Authority to verify whether a taxable person has correctly complied with UAE Excise Tax legislation.
The review may examine whether the business has:
The FTA's current Excise Tax Guide explains that the Authority may conduct tax audits and issue tax assessments subject to the applicable Tax Procedures Law.
Excise Tax obligations can apply to persons involved in activities such as:
These activities are specifically identified by the FTA on its Excise Tax registration service.
Businesses operating in sectors involving tobacco products, electronic smoking devices, liquids used in such devices, beverages and other excise goods should carefully assess their Excise Tax obligations.
Excise Tax compliance involves more than simply filing a tax return. Businesses need reliable transaction, inventory and supporting records that allow their Excise Tax position to be verified.
An Excise Tax audit can identify:
The FTA has continued to strengthen market inspections and compliance activities. In April 2026, the FTA reported approximately 176,000 field inspection visits during 2025, including enforcement against non-compliant excise goods.
For businesses handling excise goods, maintaining accurate records and having a strong compliance process is therefore essential.
The first step is confirming that the business has correctly assessed whether it needs to register for Excise Tax.
The FTA provides an Excise Tax registration service through EmaraTax for persons required to register.
A professional review can examine:
Excise Tax returns should accurately reflect the taxable activities and liabilities of the business.
A review can compare:
This can help identify discrepancies before they become larger compliance issues.
Correct identification and classification of excise goods is an important part of compliance.
Businesses may need to assess whether products fall within the applicable Excise Tax categories and whether the correct tax treatment has been applied.
This is particularly important where a business has a large or frequently changing product portfolio.
Inventory reconciliation can be a significant part of an Excise Tax review.
The business may compare:
Opening Stock + Purchases/Production − Sales/Disposals = Closing Stock
Differences between physical inventory and accounting records should be investigated and properly documented.
The FTA's 2026 Excise Tax materials also address specific issues involving natural shortages and natural losses of excise goods, showing why accurate stock records and supporting documentation are important.
Businesses importing excise goods should maintain documentation supporting the movement and tax treatment of those goods.
A review may include:
Businesses operating with designated zones may have specific Excise Tax considerations depending on how goods are moved, stored or released.
A professional review can help trace goods entering and leaving relevant locations and identify transactions requiring further tax analysis.
If the FTA requests information, businesses should be able to provide accurate and organised records.
Potential documents may include:
An Excise Tax audit may involve several stages.
The FTA may communicate with the taxable person regarding an audit or request for information.
The business gathers the requested records and supporting documentation.
The records are examined to determine whether the Excise Tax position is accurate.
Excise Tax returns can be compared against accounting records, inventory and transaction data.
Potential differences or compliance issues are identified and investigated.
Where applicable, the FTA may issue a tax assessment based on its findings.
The business may need to address identified issues, settle additional liabilities where applicable and improve its compliance processes.
Under the general rule stated in the current FTA Excise Tax Guide, the FTA generally may not conduct a tax audit or issue a tax assessment after five years from the end of the relevant Tax Period. However, exceptions apply.
For example, if the taxable person was notified of the commencement of the audit before the five-year period expired, the audit or assessment may continue beyond that period subject to the applicable rules. Specific exceptions also apply to voluntary disclosures, refund applications, tax evasion and registration failure.
Businesses should therefore retain relevant records and avoid assuming that older periods are automatically outside the scope of review.
Some common areas that may create compliance risks include:
Businesses should investigate discrepancies rather than allowing unexplained differences to remain in their accounting and tax records.
Although both are administered by the FTA, Excise Tax and VAT are different taxes.
|
Excise Tax Audit |
VAT Audit |
|
Focuses on excise goods and related activities |
Focuses on taxable supplies and VAT transactions |
|
Relevant to persons with Excise Tax obligations |
Relevant to VAT-registered taxable persons |
|
Strong focus on goods, stock and movement |
Strong focus on sales, purchases and VAT treatment |
|
May involve excise goods inventory reconciliation |
May involve input and output VAT reconciliation |
|
Includes Excise Tax returns and records |
Includes VAT returns and VAT documentation |
Businesses subject to both taxes should maintain separate but coordinated compliance processes.
Businesses can improve audit readiness by conducting periodic internal reviews.
Keep accounting, inventory and tax records complete and consistent.
Investigate differences between physical stock, inventory systems and accounting records.
Compare returns against underlying transaction and accounting information.
Keep invoices, customs documents, stock records and other evidence supporting the tax position.
Regularly verify that products are appropriately classified under applicable Excise Tax rules.
Excise Tax legislation and FTA guidance can change. The FTA's legislation database currently includes new 2026 Excise Tax decisions, including Cabinet Decision No. 137 of 2026 concerning Excise Price for certain tobacco products and liquids used in electronic smoking devices and tools.
Young and Right can help UAE businesses strengthen their Excise Tax compliance and prepare for potential FTA reviews.
Support can include:
The objective is to help businesses maintain accurate records and develop a more structured approach to Excise Tax compliance.
Professional support can help businesses:
Improve tax accuracy
Identify potential calculation and reporting errors.
Strengthen record keeping
Create better-organised accounting, inventory and supporting records.
Improve audit readiness
Prepare documentation before an FTA review.
Identify discrepancies early
Detect inconsistencies between tax returns, accounting data and stock records.
Reduce administrative pressure
Allow internal teams to focus on their core business activities.
Strengthen compliance processes
Develop repeatable procedures for Excise Tax monitoring and reconciliation.
Before an FTA Excise Tax audit, businesses should check whether they have:
Correct Excise Tax registration
Accurate Excise Tax returns
Proper product classification
Updated inventory records
Reconciled stock balances
Complete import documentation
Supporting invoices
Accounting ledgers
Excise Tax payment records
Production records where applicable
Designated-zone movement records where relevant
Supporting documentation for tax calculations
Properly investigated discrepancies
Protect your business from excise tax compliance risks with professional audit support. Get expert assistance to review records, identify discrepancies, strengthen documentation, and prepare for excise tax audits in the UAE.
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