Typical Vat Audit Checklist

dilip jaindilip jain    16 July 2020
Typical Vat Audit Checklist

With over 500 private clarifications, a number of guides and public clarifications issued after the enactment of VAT since Jan 2008, it is imperative companies check their policies , process and procedures for ensuring no Vat provisions are violated and proper documentation is kept.

In this regard companies have even initiated a mock Vat Audit to check their own preparedness, on following lines:

Please provide the names of all Directors and Officers of the Taxable Person (if a company).
Please provide the names of all owners of the Taxable Person.
Please provide the names of all other Taxable Persons with which the directors of the Taxable Person are involved, including any companies based outside the UAE.
Please provide the names of all other Taxable Persons with which the owner(s) of the Taxable Person are involved, including any companies based outside the UAE.
What was the date the on which the Taxable Person began making supplies?
What accounting systems are used?
Please provide a description of any goods supplied.
Please provide a description of any services supplied.
Where are the Taxable Person's customers located (e.g. UAE / other GCC countries / outside the GCC)?
How many employees does the Taxable Person have?
How many  different premises does the Taxable Person have?  
What type of premises does the Taxable Person have (e.g. office, warehouse, manufacturing, retail, etc.)? 
Please provide the addresses for all premises.
Please provide details of any associated companies.
If there are associated companies, please provide details* of any intercompany:
a. Charges
b. Invoicing
c.  Payments
d. Accounting entries made without either an invoice being issued / received or payment being made / received.
Are any goods supplied free of charge? If so, please provide details* of these.
Are any services supplied free of charge? If so, please provide details* of these.
Are any goods or services supplied at a reduced / nil price because the recipient supplies goods or services to the Taxable Person on the same basis?  If so, what is the transaction value used for VAT purposes.
Do you import goods from outside the UAE?
Do you import services from outside the UAE?
 Do you issue vouchers?  If so:
 a) How much do you charge for the voucher?; and
 b) what is the advertised monetary value (i.e. the face value) on the  voucher?
Do you make any supplies through an agent? If so, what are they?
Do you act as an agent for anyone else?
Is personal use made of any Taxable Person assets (e.g. vehicles, equipment, accommodation)? 
Do you provide Taxable Person entertainment to customers and contacts?
Do you give gifts to customers and contacts?
Do you have any establishments outside the UAE?
If so, where are they?
Do you sell any goods under the profit margin scheme? 
If so, what goods do you sell?
Do you supply any goods that are subject to a domestic reverse charge in the UAE?
If so, what are they?
Do you have any assets designated for long term use?*

If so, have you spent more than AED 5,000,000 on any single item?**
 a) Buildings that you have
      i.  Purchased,
     ii. Constructed,
    iii. Extended, refurbished, renewed, or fitted out, including other  work undertaken to the building?

If so:
1. How much was spent on the asset in total?
2. Please provide details of the use currently made of the asset. 
3. Please list all uses that have been made of the asset in the past.   
Do you have any assets designated for long term use?*

If so, have you incurred expenditure consisting of smaller sums which collectively amount to AED 5,000,000 or more where the sums are staged payments for either:

 a) Buildings that you have
      i. Purchased,
     ii. Constructed,
    iii. Extended, refurbished, renewed, or fitted out, including other  work undertaken to the building?**; or

 b) Any goods or immovable property that you have
      i. Purchased,
     ii. Constructed,
    iii. Assembled or installed where components are supplied separately for assembly?

So:
1. How much was spent on the asset in total?
2. Please provide details of the use currently made of the asset. 
3. Please list all uses that have been made of the asset in the past.   
Have any adjustments been made for bad debts?
How are deposits and any other advance payments received treated?
What was the date on which you met (or expect to meet) the deregistration conditions (if applicable)?

Are you usually in a refundable position, considering your activities and business model?

The Vat audit process should be reviewed internally and once externally by Auditors or a Third party to check robustness of controls , on an on-going basis.  With penalty as high as 1% per day, one cannot be non compliant.

 

Disclaimer: Content posted is for informational & knowledge sharing purposes only and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/ interpretation of the publisher is based on the available Law, guidelines, and information. Each reader should take due professional care before you act after reading the contents of that article/ post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide and should not be relied on for tax or accounting advice.

You can access Law including Guidelines, Cabinet & FTA Decisions, Public Clarifications, Forms, Business Bulletins for all taxes (Vat, Excise, Customs, Corporate Tax, Transfer Pricing) for all GCC Countries in the Law Section of GCC FinTax. 

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