Excise Tax Audit

What is Excise Tax Audit?
Excise tax audit is the verification of the excise tax liability of a taxable person for a particular Tax period. This is an examination to check whether the liabilities are reported correctly and are paid within the due date or not.

What is the scope of Excise Tax Audit in the UAE? When And Where?
The Excise Tax Authority can carry out Tax Audit at any time it feels necessary to do so. The Tax Auditor can either visit the premises of the taxable person or they can be called to the offices of the FTA to carry out Tax Audit.

Who will be audited?
Federal Tax Authority will determine who all should be audited and at what interval. A person who has registered for Excise tax or supposed to be registered for Excise Tax will be audited at the discretion of the authority. It will be determined by the Tax Auditor / FTA based on the possible risk foreseen by the Authority on account of tax evasion or errors.

How one will come to know about Excise Tax Audit?
In a normal scenario, FTA will be sending five days prior notice to the taxable person for Tax Audit . But in the case of suspected Tax Evasion, a surprise visit from the Tax Auditor can be expected at any time.

How is Excise Tax Audit Conducted?
The Tax Auditor will verify the documents, inventories, premises of the taxable person etc., to check the exact taxable position of the taxable person during the course of Tax Audit. The Tax Auditor has the right to take copy or the original of the documents, goods or samples for their further review.

The tax auditor has the right to interact with the persons of the company in various departments like accounts, logistics, warehouse keeper etc., to understand the business and confirm certain transactions.

What should be kept ready by the taxable person for an Excise Tax Audit?
A taxable person subject to Tax Audit must give full facility and assistance to the Tax Auditor during the course of Tax Audit. If the taxable person has a tax agent or a legal representative he will also be responsible to do so.

  1. The Tax Auditor should be allowed to enter into the premises of the taxable person.
  2. The Tax Auditor should be given access to the Excise Tax records and documents.
  3. Staff such as the person responsible for compiling Excise Tax Return etc., are to be present during the course of Tax Audit.

As an External Auditor / Independent Auditor what we do for you?

  • We will check weather the documents maintained for the Excisable goods are in line with the requirement of the UAE Excise Tax Law.
  • We will verify the Tax calculation sheet prepared by the Taxable Person and ensure that there is no discrepancy.
  • We will physically verify the inventory maintained by the Taxable Person on particular date and certify the same. This will ensure that the reconciliation of Excisable goods movement is accurate.
  • We will ensure that the Taxable person will be ready to face a Tax Audit at any time in future.

What are the records to be maintained under UAE Excise Tax?
There are 9 records to be strictly maintained by a taxable person for Tax Audit.

  1. Records of all produced, imported or stockpiled Excise Goods.
  2. Records of exported Excise Goods.
  3. Evidence of exported Excise Goods.
  4. Records of stock levels.
  5. Detailed records of lost or destroyed Excise Goods.
  6. Tax Record for Due Tax on imported Excise Goods.
  7. Tax Record for Due Tax on produced Excise Goods.
  8. Tax Record for Due Tax on Excise Goods that have been stockpiled.
  9. Evidence of deductible tax:
    a) Tax paid on exported Excise Goods.
    b) Tax paid on Excise Goods constituent to another Excise Good which is or is subject to tax.
    c) Mistakenly amounts paid to the Tax Authority.

1.Some of the Sample Reports that the Tax Auditor/ Tax Authority may ask you to submit to their office are:

  • Report for one-year period prior to implementation of Excise Tax i.e, 1st October 2016 to 30th September 2017.
  • Item wise details of quantity and value of excise goods stored.
  • Item wise report on average monthly sales for excise goods.
  • Item wise report on average monthly inventory for excise goods.
  • Item wise report on quantity of excise goods produced.
  • Item wise report on quantity of excise goods imported

2. Report for a specific period after implementing excise tax.
The tax auditor or the FTA / Excise Tax Authority may demand the following details for any taxable period (subsequent to 1st October 2017) for Tax Audit purpose.

  • Item wise Excise goods produced.
  • Item wise Excise goods imported.
  • Item wise Excise goods released from Designated Zones.
  • Item wise Excise goods sold in the local market.
  • Item wise Excise goods exported.
  • The list of companies to whom the excise goods are sold.
  • The list of retail stores to whom the excise goods are sold.

What are the powers of a Tax Auditor during an Excise tax audit?
During the course of a Tax Audit, the Tax Auditor can ask for:

  •  Original records.
  • Copies of records.
  • Samples of goods

The above records include the invoices, tax calculation sheet, etc.

What are the rights of taxable person during an Excise Tax Audit?
During the course of Tax Audit, you will be allowed to supervise while the records are removed by the Tax Auditor. If the Tax Auditor removes the records or any items in correspondence with the Tax Audit, the Tax Auditor has the right to get back those records or items after the assessment. The taxable person can demand for a receipt (documentary evidence) for the removal of any documents or samples by the Tax Auditor.

What are the taxable goods under the UAE Excise Tax law?
Excise Tax law became effective in the UAE from 1st October 2017. This law is applicable for the products such as Tobacco & Energy Drinks at the rate of 100% & for Carbonated Drinks at the rate of 50%.

Emirates Chartered Accountants Group provides Excise Tax Audit Service in Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman & Ras Al Khaimah UAE – For more information please contact our following representatives:
For Excise Tax Audit in Dubai Abu Dhabi, Sharjah, Fujairah, Ajman & Ras Al Khaimah UAE:

 

Contact Person: Mr. Manu Nair
Email: manu@emiratesca.com
Mobile: +971 – 502828727
Contact Person: Mr. Pradeep Sai
Email: sai@emiratesca.com
Mobile: +971 – 556530001
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