Tax Audit

Under Federal Decree-Law No. 28 of 2022 on Tax Procedures, the FTA must notify you at least 10 business days before conducting a tax audit, stating the scope and the tax periods under review. In suspected tax-evasion cases, however, the authority may conduct an audit without prior notice.

You should maintain tax invoices, credit notes, bank statements, general ledgers, payroll records, and filed returns that support every figure on your returns, as the burden of proof rests with the taxpayer. VAT records must be retained for at least 5 years, corporate tax records for 7 years, and real estate records for 15 years.

Under the Tax Procedures Law, you have the right to be informed of the audit scope and periods, to appoint a registered tax agent or legal representative to deal with the FTA on your behalf, and to view and obtain copies of the documents and data the FTA relied on for its findings. A qualified tax consultant can manage FTA correspondence and the response timeline for you.

If the FTA identifies under-declared tax, you face a penalty on the unpaid amount plus late-payment penalties, and failing to maintain proper records carries a fixed penalty (AED 10,000 for a first offence and AED 20,000 for repeat violations). The exact percentages depend on the applicable penalty regime in force, so it is best to correct errors via voluntary disclosure before an audit begins to reduce exposure.