Received an FTA Audit Notification in the UAE? What to Do Next

What Does an FTA Audit Notification Mean?

A tax audit is a procedure undertaken by the Federal Tax Authority to examine business records, information, data or transactions in order to verify whether a person has complied with the applicable UAE tax legislation.

The audit may relate to a specific tax, tax period, legal entity, transaction category or set of accounting records. A business should therefore avoid making assumptions about the audit scope before reviewing the notification and all accompanying instructions.

UAE Tax Procedures legislation establishes rules governing tax audits and the notification of the person subject to audit. In practice, the notification received from the FTA should be treated as the primary reference for the relevant scope, dates, submission method and requested information.

What Should You Check in the Audit Notification First?

Review and record the following information immediately:

• The name and Tax Registration Number of the person being audited.
• The tax type or tax types covered by the audit.
• The relevant tax periods or financial years.
• The proposed date, location and method of the audit.
• The documents, records or data requested by the FTA.
• Any stated response or submission deadline.
• The channel through which information must be submitted.
• The reference number and contact details stated in the notification.

The business should also confirm that the communication was received through an official channel and, where applicable, compare it with the information available through the company’s EmaraTax account.

If the notification is unclear, the business should seek clarification through the appropriate official channel without delaying the preparation of the records that are already clearly requested.

Immediate Steps to Take After Receiving an FTA Audit Notification

1. Record the receipt date: Preserve the original notification, attachments and evidence of when and how it was received.
2. Identify all deadlines: Add every date stated in the notification to a controlled audit-response schedule.
3. Preserve relevant records: Suspend routine deletion of potentially relevant physical and electronic records.
4. Define the audit scope: Identify the taxes, periods, entities and transaction categories being reviewed.
5. Appoint a response coordinator: Assign one person to control communications, document requests and submissions.
6. Begin an initial review: Compare the submitted returns with the accounting ledgers, supporting records and financial statements.
7. Assess the need for professional support: Determine whether the business requires a tax adviser, an appointed Registered Tax Agent or legal support.

Original records should not be altered or recreated in a way that obscures when or how they were produced. If a new reconciliation or explanatory schedule is prepared, it should be clearly identified as a schedule created for the audit response while preserving the underlying source records.

How to Form an Internal FTA Audit Response Team

The size of the response team will depend on the business and audit scope. Relevant participants may include:

• Finance and accounting personnel.
• Internal tax or compliance staff.
• Legal advisers where appropriate.
• Information technology and data specialists.
• Sales, procurement and operational teams.
• Senior management or governance representatives.
• An appointed Registered Tax Agent or external tax adviser.

Each team member should have a defined responsibility. The business should also establish an approval process so that information is reviewed before it is submitted to the FTA.

A central request tracker should record what was requested, the relevant deadline, the document owner, the person who reviewed it, the date of submission and any explanation provided.

Documents and Records Commonly Required for an FTA Audit

The records required will depend on the tax type, audit period, business activity and wording of the notification. They may include:

• Submitted tax returns and payment confirmations.
• General ledgers and trial balances.
• Financial statements and external audit reports, where applicable.
• Sales and purchase invoices.
• Credit notes and debit notes.
• Output Tax and Input Tax records.
• Bank statements and bank reconciliations.
• Customer, supplier and commercial agreements.
• Fixed-asset, inventory and expense records.
• Related-party and intra-group transaction records.
• Import, export and customs documentation.
• Corporate Tax computation schedules and tax adjustments.
• Correspondence, decisions or clarifications supporting a tax treatment.
• Accounting-system reports or source-data files where requested.

The documents should be organised by tax period, transaction and request item. Files should be readable, complete and consistent with the information previously submitted to the FTA.

Businesses should review the applicable statutory record-retention requirements for each tax and period rather than applying one retention period to every category of record.

How to Review Corporate Tax and VAT Returns Before Responding

Corporate Tax Audit Readiness Review

A Corporate Tax review may include:

• Reconciling reported revenue and expenses with the financial statements.
• Reviewing adjustments from accounting profit to taxable income.
• Checking disallowed or restricted expenditure.
• Reviewing related-party transactions and arm’s-length requirements where applicable.
• Verifying exemptions, elections and reliefs claimed by the business.
• Reviewing tax losses and carried-forward balances.
• Confirming that material positions are supported by appropriate records.

VAT Audit Readiness Review

A VAT review may include:

• Reconciling taxable sales with the submitted VAT returns.
• Reviewing the tax rate and treatment applied to supplies.
• Testing Input Tax recovery and supporting tax invoices.
• Reviewing tax invoices, credit notes and adjustment records.
• Checking imports, exports and zero-rated supplies.
• Reviewing bad-debt adjustments and mixed-use expenses where applicable.
• Reconciling VAT returns with sales and purchase ledgers.

The business should consult the relevant FTA Corporate Tax guides and public clarifications and FTA VAT guides and public clarifications based on the circumstances and periods being reviewed.

Reconciling Tax Returns With Accounting Records and Financial Statements

Reconciliations help demonstrate where reported figures came from and identify differences before information is submitted to the FTA.

Key reconciliations may include:

• Reported revenue to the general ledger and financial statements.
• Output Tax to the sales ledger.
• Input Tax to the purchase and expense ledgers.
• Imports to customs records and accounting entries.
• Tax payable balances to the general ledger.
• Credit notes, timing differences and period-end adjustments.
• Corporate Tax adjustments to the computation schedules and supporting documents.
• Intercompany balances to related-party records and agreements.

A reconciliation should do more than demonstrate that two totals agree. It should explain the reason for any difference, the period to which it relates, the tax treatment applied and the evidence supporting that treatment.

How to Identify Potential Tax Exposure Before the Audit Begins

After completing the initial review and reconciliations, the business should prepare a controlled record of potential issues.

Each item in the risk register may include:

• A description of the matter or difference identified.
• The relevant tax and tax period.
• The affected transaction, account or entity.
• The estimated financial or tax value.
• The reason for the tax treatment originally applied.
• The available supporting evidence.
• The level of uncertainty or potential exposure.
• The proposed action and responsible person.

Identifying a potential difference does not automatically establish that a tax violation or penalty has occurred. The facts, legislation, period, available documentation and procedural options should be reviewed before a decision is made.

This review may also help determine whether a disclosure, correction or other formal procedure should be considered under the rules applicable to the specific circumstances.

How to Respond to FTA Information and Document Requests

An effective response should be:

• Timely: Submitted by the deadline and through the method specified by the FTA.
• Complete: Addressing each requested item without unjustified omissions.
• Accurate: Checked against the original records and relevant returns.
• Organised: Supported by an index and clearly named files.
• Consistent: Aligned with information and explanations previously submitted.
• Traceable: Retained in a submission log with copies of all documents provided.

If a requested record is unavailable or the request requires clarification, the matter should be raised promptly and transparently through the appropriate official channel.

The business should avoid submitting assumptions or unverified answers simply to respond quickly. Material explanations should be reviewed by the appropriate finance, tax or legal personnel before submission.

What Happens During an FTA Tax Audit?

The audit process will depend on the circumstances and may involve a remote document review, written requests for further information, discussions with responsible personnel or an on-site audit conducted in accordance with the applicable procedures.

During the audit, the business should:

• Maintain one authorised point of contact.
• Record every request, deadline and response.
• Retain a copy of every document submitted.
• Ensure that relevant personnel understand the transactions being examined.
• Answer questions clearly and within the scope of the request.
• Document material verbal explanations where appropriate.
• Escalate technical, legal or procedural issues to the appropriate specialist.

UAE Tax Procedures legislation provides for the person subject to audit to be notified of the audit outcome in accordance with the applicable process. Any resulting assessment or decision should be reviewed carefully to determine its effect and the appropriate procedural response.

Common Mistakes Businesses Make During an FTA Audit

• Waiting too long before beginning the audit-readiness review.
• Missing a deadline stated in the notification or information request.
• Submitting documents before checking them against the tax returns.
• Allowing different employees to respond without central coordination.
• Providing inconsistent figures or explanations at different stages.
• Failing to retain a record of what was submitted.
• Providing information beyond the request without understanding its relevance.
• Assuming that accounting-system reports alone prove the tax treatment.
• Recreating documents retrospectively without explaining when or why they were prepared.
• Delaying the analysis of potential errors or exposure.
• Confusing general tax advice with formal representation before the FTA.

A clear review, approval and submission protocol can reduce these risks and improve the accuracy and consistency of the business’s response.

When Does a Tax Audit Matter Become a Tax Dispute?

Receiving an audit notification does not mean that a tax dispute has started. A review or dispute process may become relevant if the FTA subsequently issues an assessment or official decision with which the business disagrees.

The audit stage should be distinguished from a reconsideration request or an objection before the Tax Dispute Resolution Committee. Each stage has its own requirements, deadlines, permitted applicants and supporting-document expectations.

The FTA explains that reconsideration applies to an official decision issued by the Authority. General enquiries, complaints, clarifications and routine information requests are not automatically eligible for reconsideration.

When an official decision is issued, the business should promptly identify the correct procedural route and the current legal deadline. Further information is available through the FTA’s Tax Dispute Resolution resources .

If the audit leads to a Tax Assessment or formal decision, see our guide to challenging an FTA tax decision and record the notification date before selecting the procedure.

How a Mock FTA Tax Audit Can Improve Audit Readiness

A mock FTA tax audit is a structured internal review that simulates relevant parts of a potential FTA examination. It can be conducted before an audit notification or used to test readiness after a notification has been received.

A mock audit may include:

• Identifying the taxes, periods and transactions with higher potential risk.
• Testing samples of invoices, accounting entries and supporting documents.
• Reconciling tax returns with financial and operational records.
• Reviewing controls used to prepare and approve tax returns.
• Testing how quickly the business can retrieve requested records.
• Identifying gaps in documentation or approval processes.
• Preparing a findings and corrective-actions register.
• Testing the internal process for receiving and answering information requests.

A mock FTA tax audit cannot guarantee that the Authority will identify no issues or that no tax liability or penalty will arise. Its purpose is to identify weaknesses, improve documentation and strengthen the business’s ability to respond.

Learn more about XFLEX’s FTA Tax Audit Readiness and Mock Tax Audit Services in the UAE .

How XFLEX Supports Businesses Before and During an FTA Audit

Subject to the agreed engagement scope and the circumstances of the case, XFLEX can assist businesses with:

• Reviewing the FTA audit notification and identifying its requirements.
• Conducting an audit-readiness review or mock FTA tax audit.
• Reviewing Corporate Tax and VAT returns.
• Reconciling returns with accounting records and financial statements.
• Reviewing supporting documents and schedules before submission.
• Identifying potential differences and areas of tax exposure.
• Organising FTA requests, supporting documents and response records.
• Supporting communications within the applicable professional and regulatory scope.
• Involving an appointed Registered Tax Agent where formal representation is required.
• Identifying when an assessment or decision may require a separate tax-dispute review.

For wider Corporate Tax compliance and advisory matters, review our Corporate Tax Advisory Services in the UAE .

Where a business requires an appointed Tax Agent to deal with the Authority within the permitted scope, review our Registered Tax Agent and FTA Representation Services .

Frequently Asked Questions About FTA Audit Notifications

What does an FTA audit notification mean?

It means the Federal Tax Authority intends to examine records, information or transactions connected with the business’s tax compliance. The notification alone does not establish a violation or penalty.

Does an FTA audit notification mean the business has violated UAE tax law?

No. A tax audit is a compliance-verification procedure. Any later finding will depend on the facts, records, applicable legislation and outcome of the examination.

What should a business do immediately after receiving the notification?

Record the receipt date, confirm the audit scope and deadlines, preserve the relevant records and appoint one person to coordinate the response.

What documents may the FTA request during a tax audit?

The FTA may request tax returns, invoices, ledgers, financial statements, bank records, agreements, customs documents and tax-computation schedules. The exact requirements depend on the notification.

Can an FTA audit cover both Corporate Tax and VAT?

The tax types covered will depend on the scope stated in the FTA notification. The business should identify the relevant taxes, periods and legal entities before beginning its review.

Should tax returns be reconciled with accounting records before responding?

Yes. Reconciliations help demonstrate the source of reported figures and identify differences between the tax returns, ledgers and financial statements.

Can a Registered Tax Agent support a business during an FTA audit?

An appointed and registered Tax Agent may support the business and deal with the FTA within the limits of the appointment, applicable authority and regulatory requirements.

What happens if potential tax exposure is identified?

The business should analyse the facts, documents, legislation and affected period before deciding whether a correction, disclosure or other procedural action is appropriate.

When can an FTA audit matter become a tax dispute?

A review or dispute process may become relevant after the FTA issues an official assessment or decision with which the business disagrees. This is separate from receiving an audit notification.

Does a mock FTA tax audit guarantee that no penalties will arise?

No. A mock audit cannot guarantee an outcome. It helps identify gaps, improve documentation and strengthen the company’s audit readiness.

Official UAE Sources

• Federal Decree-Law No. 28 of 2022 on Tax Procedures, as amended through 2025 (FTA consolidated English text)
• Cabinet Resolution No. 74 of 2023 on the Executive Regulation of the Tax Procedures Law
• FTA Corporate Tax Guides, References and Public Clarifications
• FTA VAT Guides, References and Public Clarifications
• FTA Tax Dispute Resolution