Why companies in UAE should opt for VAT Health Check to avoid tax penalties

The UAE Federal Tax Authority (FTA) has implemented a strict VAT compliance regime, with tax audits scheduled to begin in 2023. Businesses that fail to comply with VAT laws and regulations may be subject to significant fines and penalties.

A VAT health check is a proactive measure that businesses can take to identify and mitigate VAT compliance risks. It involves a comprehensive review of VAT records, procedures, and internal controls by a qualified tax professional.

There are several key benefits to opting for a VAT health check:

• Identify and correct errors and omissions: A VAT health check can help businesses identify any errors or omissions in their VAT returns, invoices, and other records. This can help to minimize the risk of fines and penalties from the FTA.
• Improve VAT compliance: A VAT health check can help businesses to identify areas where their VAT compliance can be improved. This may involve implementing new procedures, training staff, or updating internal controls.
• Reduce the risk of an FTA audit: A VAT health check can demonstrate to the FTA that a business is committed to VAT compliance. This can help to reduce the risk of an audit.
• Improve financial management: A VAT health check can help businesses to improve their financial management by ensuring that their VAT records are accurate and up-to-date & reconciled with Customs records & books of accounts.

Specifically, a VAT health check can help businesses to:

• Verify the accuracy of VAT returns:This includes ensuring that taxable supplies are correctly classified, taxed at the appropriate rate, and supported by proper documentation.
• Identify and correct errors in VAT calculations:This may involve reviewing input credit claims, import values, and other calculations.
• Ensure compliance with VAT record-keeping requirements:This includes maintaining proper tax invoices, tax credit notes, custom bill of entries, and custom bill of exits.
• Review internal controls for VAT compliance:This may involve assessing the effectiveness of VAT policies and procedures, and identifying any areas where improvement is needed.

Overall, a VAT health check is a valuable investment for UAE businesses that want to minimize their risk of tax penalties and improve their VAT compliance.

Conclusion

A VAT health check is an essential tool for UAE businesses that want to avoid tax penalties and improve their VAT compliance. By opting for a VAT health check, businesses can demonstrate to the FTA that they are committed to VAT compliance and reduce the risk of an audit

How MBG can help

MBG is a Registered Tax Agency approved by the FTA. We offer comprehensive VAT health checks to help UAE businesses identify and address any potential areas of non-compliance. Our experienced tax professionals can provide businesses with a detailed report of their findings, along with recommendations for improvement.

If you are a UAE business that is concerned about VAT compliance and tax penalties, we encourage you to contact MBG for a VAT health check. We can help you ensure that your business is well-prepared for an FTA audit and that you are minimizing your risk of fines and penalties.