Receiving an FTA audit notification is one of the most stressful moments a UAE business can face. The audit can cover VAT, corporate tax, or both. It can span multiple years. And without proper preparation and representation, the outcome can include substantial penalties and tax assessments.
How the FTA Selects Businesses for Audit
The FTA uses a risk-based approach to audit selection. Triggers include: VAT refund claims; inconsistencies between VAT return data and e-invoicing data; large or unusual transactions; sector-specific compliance campaigns; referrals from other authorities; random selection; and businesses that have filed amended returns. The FTA is also increasing its use of data analytics to identify anomalies.
Types of FTA Audit
Field audit: the FTA visits your premises (or your representative's) and reviews records on-site. Desk audit: the FTA requests documents and information in writing and reviews them remotely — the most common type for SMEs. VAT health check: a pre-audit review the FTA may conduct before formalising an audit. Corporate tax audit: a separate process focused on the CIT return, related-party transactions and TP documentation.
What the FTA Reviews
For VAT: input tax claims and supporting invoices; output VAT on all taxable supplies; treatment of zero-rated and exempt supplies; reverse charge obligations; inter-company transactions; VAT treatment of imports and exports. For corporate tax: the basis of taxable income calculation; related-party transactions and transfer pricing; non-deductible expenses; QFZP eligibility (for free zone entities); small business relief elections.
Timeline and Process
An FTA audit typically begins with an official notification letter. This is followed by a request for documentation — the FTA will specify which records and periods they want. A field visit may be scheduled. The FTA then issues a preliminary assessment or findings letter. You have the right to respond and provide additional information. A final assessment is then issued. The whole process can take 3—12 months.
Your Rights During an FTA Audit
You have the right to professional representation. An FTA Registered Tax Agent can act as your authorised representative — filing responses, attending meetings and negotiating on your behalf. You have the right to review preliminary findings before the final assessment. You have the right to object to an assessment and to appeal through the Tax Disputes Resolution Committee. These rights are meaningful and should be exercised.
Voluntary Disclosure: Fixing Problems Before the Audit
If you identify errors in previous returns before the FTA contacts you, a voluntary disclosure filed proactively carries significantly lower penalties than errors discovered in an audit. PRF conducts VAT and CIT health checks specifically to identify past errors and determine whether voluntary disclosure is the right course of action. The FTA incentivises self-correction — it is always better to come forward than to wait.
How PRF Manages FTA Audits
PRF acts as your authorised representative throughout the audit process. We manage all correspondence with the FTA, prepare and present responses to information requests, attend FTA meetings, review preliminary assessments and draft formal objections where appropriate. Our approach is systematic, evidence-based and focused on achieving the best defensible outcome for the client.