What Is a VAT Audit in UAE?
17/09/2026
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Understanding tax audit requirements in UAE is important for businesses that are registered for VAT, subject to Corporate Tax, or otherwise required to maintain tax and accounting records. A tax audit conducted by the Federal Tax Authority (FTA) may involve reviewing tax returns, accounting records, financial information, invoices, transactions and supporting documentation.
Businesses should therefore maintain accurate and organised records throughout the tax period rather than waiting until an audit or information request occurs.
Young and Right provides accounting and tax support to businesses in Dubai and across the UAE, helping businesses organise financial records, review tax information and prepare documentation for tax-related requirements.
The exact requirements depend on the type of tax, the taxpayer and the scope of the FTA review. In general, businesses should be able to support the information reported in their tax returns with appropriate accounting records and source documents.
Important areas can include:
The FTA states that Corporate Tax taxpayers must maintain records and documents supporting information provided in their Tax Returns and other documents required by the FTA. Essential records can include transaction records, asset records, liability records and records of shares or ownership interests.
An FTA tax audit can apply to taxpayers where the Authority conducts a compliance review under the applicable tax legislation.
The possibility of an audit means businesses should maintain proper records regardless of whether they have received an audit notification.
Different tax obligations may apply to:
The specific obligations depend on the taxpayer's status, business activity and applicable tax law.
One of the most important parts of preparing for a tax audit is maintaining documentation that supports the figures and information reported to the FTA.
Businesses should maintain appropriate accounting records, including:
Sales documentation may include:
Purchase documentation may include:
Bank statements and reconciliations can help establish the connection between accounting transactions and actual financial activity.
The FTA specifically identifies asset records, including information about purchases and disposals of assets, as among the records that Corporate Tax taxpayers should maintain.
Businesses should also maintain appropriate records of liabilities relevant to their accounting and tax position.
Depending on the taxpayer and circumstances, records of shares or ownership interests may also be relevant.
For UAE Corporate Tax purposes, the FTA states that records and documents should generally be kept for at least seven years following the end of the relevant Tax Period.
This means businesses should have a document-retention system that allows relevant accounting and tax records to be retrieved when required.
The FTA has also issued FTA Decision No. 4 of 2026, concerning rules and requirements for maintaining information contained in accounting records and commercial books.
Therefore, businesses should review their record-keeping procedures periodically and ensure that their accounting information is maintained in accordance with the applicable requirements.
Corporate Tax has introduced additional importance around financial statements, accounting records and tax calculations.
For Corporate Tax purposes, businesses should ensure that their accounting information supports the calculation reported in their Corporate Tax return.
The FTA explains that Corporate Tax taxpayers must maintain records supporting the accuracy of information provided in their returns.
A business should be able to trace relevant amounts from its tax return back to its accounting records and supporting documentation.
This is an important distinction.
A tax audit by the FTA is not the same thing as an independent financial statement audit.
For UAE Corporate Tax purposes, certain categories of taxable persons are required to prepare and maintain audited financial statements.
The FTA's Corporate Tax return guidance states that taxable persons with Revenue exceeding AED 50 million during the relevant Tax Period and all Qualifying Free Zone Persons, regardless of revenue level, are required to prepare and maintain audited financial statements for Corporate Tax purposes.
Businesses should therefore determine whether they fall into a category requiring audited financial statements rather than assuming that every UAE business has the same audit obligation.
VAT-registered businesses should also maintain records supporting their VAT returns.
Depending on the circumstances, relevant VAT documentation can include:
The FTA's published tax-obligation guidance identifies records relating to supplies, imports, tax invoices, tax credit notes, exports and adjustments among the records VAT-registered businesses may need to retain.
The exact scope of an FTA audit can vary. Depending on the tax and circumstances, the review may examine whether the taxpayer's tax position is supported by appropriate records.
Areas that may be reviewed include:
The FTA may review whether the business's tax registration information is accurate and appropriate.
Submitted VAT or Corporate Tax returns may be compared against accounting records and supporting documentation.
The business's revenue records may be examined to understand whether reported amounts are complete and appropriately treated for tax purposes.
Expense records may be reviewed to determine whether accounting and tax treatment is supported by appropriate documentation.
Individual transactions may be examined using invoices, contracts, bank records and other supporting documents.
Financial statements and accounting records may be relevant when assessing the business's tax position.
The FTA may request documents that help verify information included in tax returns or other submissions.
The FTA states that taxpayers have an obligation to provide full and accurate information within the prescribed timeframe when legitimately requested by the Authority.
A structured preparation process can make it easier to respond to an audit.
Collect relevant tax returns, invoices, financial statements and supporting documents.
Reconcile bank accounts, receivables, payables and other significant balances.
Check whether reported tax information is supported by the underlying accounting records.
Make sure significant transactions have appropriate invoices, contracts, payment evidence or other documentation.
Identify missing invoices, unexplained balances or incomplete supporting schedules.
Organise documents according to the relevant tax period and the information requested.
Provide complete and accurate information within the applicable timeframe.
Poor record keeping can make an FTA review more difficult.
Common issues include:
Maintaining records continuously is generally more practical than trying to reconstruct several years of information after receiving an audit request.
If the FTA identifies an issue, the consequences depend on the nature of the finding and the applicable tax legislation.
Businesses should carefully review any assessment, decision or penalty notice and obtain appropriate professional advice where necessary.
The FTA provides procedures for taxpayers to request reconsideration of certain FTA decisions. Its current guidance states that a reconsideration request must generally be submitted within 45 business days from the date of the FTA decision and must meet the applicable requirements.
This makes it important for businesses to review FTA communications promptly rather than allowing deadlines to pass.
Young and Right provides accounting and tax support for businesses in Dubai and across the UAE.
For businesses preparing for an FTA tax audit, Young and Right can assist with areas such as:
The exact scope of support depends on the business's tax obligations and the nature of the FTA request.
For businesses searching for tax audit support in UAE, having organised accounting records and clear supporting documentation can make the audit-response process more structured.
Stay prepared for a tax audit with accurate records, supporting documents, and proper financial reporting. Get professional tax audit support to review your tax position, identify potential discrepancies, organize documentation, and strengthen your UAE Corporate Tax compliance.
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