The right to audit
The Federal Tax Authority (FTA) can examine a taxable person's records and returns to check that VAT, Corporate Tax, and other obligations have been reported correctly.
Tax compliance guide · UAE
FTA tax audits in the UAE
What UAE businesses need to know about Federal Tax Authority audits — the FTA's powers, the records you must keep, how notice works, and how to be ready with reconciled books and clean working papers.
What is an FTA tax audit?
A tax audit is an examination by the Federal Tax Authority (FTA) of a taxable person's records and returns to verify that tax has been reported and paid correctly. In the UAE, this most often relates to VAT and Corporate Tax, and it can involve reviewing your accounting records, tax invoices, contracts, and the working papers behind each return.
An audit is not, by itself, an accusation of wrongdoing — it is how the FTA checks that the self-assessed figures businesses submit hold up against their underlying records. But if an audit finds that tax was under-reported, the FTA can raise an assessment for the tax due and apply administrative penalties under the applicable law.
The best position to be in is audit-ready at all times: books that reconcile, records retained for the period the law requires, and working papers that show exactly how each return was built. This guide explains the FTA's powers and how to get there.
The FTA's audit powers
The FTA's ability to audit is set out in the UAE tax procedures law and its executive regulations. In broad terms, its powers cover four areas.
Access to records
An audit may involve requesting your accounting records, tax invoices, contracts, and the working papers behind your returns, and — where relevant — visiting your premises.
Notice of an audit
The FTA generally notifies a taxable person before conducting a tax audit, within the framework set out in the tax procedures law and its executive regulations.
Assessments & penalties
If an audit finds tax was under-reported, the FTA can raise an assessment for the tax due and apply administrative penalties under the applicable law.
The precise notice period, procedures, and timeframes are defined in the legislation and can change, so confirm the current rules that apply to your situation. Where the law sets specific figures — such as record-retention periods — rely on the current legal text rather than assumptions.
Records and retention
UAE tax law requires taxable persons to keep proper records and supporting documents and to retain them for a statutory retention period. The period can differ depending on the type of record and the tax involved, and it is set by the applicable legislation — so confirm the current requirement for your circumstances rather than relying on a single fixed figure.
In practice, that means keeping accounting records, tax invoices and credit notes, contracts, import and export documentation, and the working papers behind your returns — organised so they can be produced quickly if the FTA asks. Failing to keep adequate records is itself a compliance risk that can attract penalties, separate from any underpaid tax.
Good record-keeping is not just an audit defence. It is what lets you recover input VAT, support your Corporate Tax position, and stand behind every number you report. Read more in our UAE VAT guide.
How to prepare for an audit
Preparation is continuous, not something to start when a notice arrives. These are the habits that make an audit straightforward for UAE businesses:
- Keep your books reconciled — bank, receivables, payables, VAT and Corporate Tax control accounts — so every figure on a return ties back to the ledger.
- Retain your tax records and supporting documents for the retention period the law requires, and store them so they can be produced quickly.
- Keep the working papers behind each VAT 201 and Corporate Tax return, showing how the numbers were built and which treatments were applied.
- Make sure tax invoices, credit notes, and import and export documentation are complete and match what you reported.
- Respond to FTA notices and information requests promptly, accurately, and within the time allowed.
If an audit is already on the horizon, our audit support service can help you prepare records and respond to the FTA. Keeping your VAT filing and Corporate Tax filing accurate throughout the year is the surest way to make audits uneventful.
How AIMuhaseb helps
Books that are always audit-ready
The best defence in any FTA audit is records that reconcile and figures that trace to their source. AIMuhaseb keeps every entry linked from the trial balance down to the transaction, generates VAT and Corporate Tax figures from the ledger, and retains an audit trail — so when the FTA asks how a number was built, the answer is one click away.
Every figure traceable to its source entry
VAT & Corporate Tax built from the ledger
Audit trail and records retention built in
Specialist audit support when you need it
FAQ
FTA tax audit questions, answered
What is an FTA tax audit?
An FTA tax audit is an examination by the UAE Federal Tax Authority of a taxable person's records and returns to verify that tax — such as VAT and Corporate Tax — has been reported and paid correctly. The FTA reviews your accounting records, tax invoices, and the working papers behind your returns, and may raise an assessment and penalties if it finds tax was under-reported.
How much notice does the FTA give before an audit?
The FTA generally notifies a taxable person before carrying out a tax audit, within the framework set out in the UAE tax procedures law and its executive regulations. The exact notice period and process are defined in that legislation, so the best course is to be audit-ready at all times rather than relying on the notice window to get organised.
How long do I need to keep tax records in the UAE?
UAE tax law requires taxable persons to retain their records and supporting documents for a statutory retention period, and the period can differ depending on the type of record and the tax involved. Because the precise number of years is set by the applicable law and can vary by case, confirm the current requirement for your situation — and, as a rule, keep complete records for the full period the law requires.
What records does the FTA look at in an audit?
An audit can cover your accounting records, tax invoices and credit notes, contracts, import and export documentation, bank records, and the working papers that support each return. The FTA is checking that the figures you reported are complete, correctly treated, and traceable to source documents.
How do I prepare for an FTA tax audit?
Preparation is continuous, not last-minute. Keep your books reconciled so every return ties back to the ledger, retain records and supporting documents for the required period, maintain clear working papers behind each VAT and Corporate Tax return, and respond to any FTA request promptly and accurately. Being audit-ready year-round is far less stressful than assembling everything under a deadline.
Can AIMuhaseb help if I am facing an FTA audit?
Yes. Accurate, reconciled books with defensible working papers are the best defence in any audit. AIMuhaseb keeps every figure traceable to its source entry, and our audit support service can help you prepare records, respond to FTA requests, and stand behind your returns. Tell us your situation through the enquiry form and a UAE specialist will get back to you.
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