VAT Due Diligence in UAE

What is the importance of VAT due diligence in UAE?

An impartial evaluation by an expert VAT consultant to determine the integrity of VAT procedures, paperwork, and control measures is referred to as VAT due diligence. It covers VAT returns evaluation, transactional analysis of the company’s current business patterns, tax records management, documentation forms, VAT compliance of the invoice provided by the supplier, and critical high-risk compliance zones.

VAT due diligence will be undertaken in accordance with the FTA audit viewpoint, in which important auditable regions will be identified based on sector details and a clear emphasis will be placed upon them.

Why is VAT due diligence required in the UAE?

VAT returns must be precise and in complete accordance with UAE VAT legislation and Executive Regulations. The Federal Tax Authority (FTA) has the right to audit any tax registrant to guarantee that VAT laws and regulations are being followed.

A registrant must undertake a tax due diligence to focus on issues where adherence and safeguards must be tightened in order to prevent potential errors and improve that tax filing, processes, and accounting are in conformity with UAE VAT legislation.

Frequently Asked Questions – VAT Due Diligence

1. What is the significance of performing due diligence?

   Due diligence is frequently carried out to identify compliance risks and taking corrective action to mitigate identified compliance risks.

2. What is the VAT due diligence procedure in UAE?

   VAT due diligence in UAE is a comprehensive examination of a company’s adherence with the UAE Federal Tax Authority (FTA). VAT health check, VAT Compliance Review, and VAT Pre-Audit Review are other terms for it.

3. What are the different types of due diligence?

   Depending on what is necessary, due diligence can be classified into following forms:

   1. Tax due diligence
   2. Financial due diligence
   3. Legal due diligence
   4. Environmental due diligence
   5. IT due diligence

4. Is VAT due diligence compulsory in the UAE?

   VAT due diligence is not compulsory, but it is highly recommended. To guarantee that tax compliances are appropriately followed and all tax debts are adequately addressed and resolved with the tax authorities, an organization must have a VAT assessment done every two or at most three years.

5. What is the duration of VAT due diligence in the UAE?

   • The duration of VAT due diligence is determined by a number of criteria.
   • The company’s size.
   • Activities carried out by the institution’s nature.
   • Within the same corporate group, the types and quantity of intercompany transactions (not tax group).

6. What is the purpose of VAT due diligence in the United Arab Emirates?

   1. Conduct remedial measures and ensure that you are completely compliant with UAE VAT regulations.
   2. Ensure that the UAE VAT legislation and regulations are followed.
   3. Ensure that the measures imposed by a tax-registered entity are adequate.
   4. Equip the firm for any FTA audits that may occur.
   5. Ensure that non-compliances are recognized and dealt with.

7. What is the result of VAT due diligence in the United Arab Emirates?

   Non-compliances will be detected and documented once a VAT due diligence in UAE is completed, and remedial measures will be communicated.

8. How does HLB HAMT assist in vat due diligence in UAE?

   The experienced tax squad of HLB HAMT makes sure that UAE vat laws are followed and provides efficient services regarding all tax matters.