Introduction
The Federal Tax Authority (FTA) has intensified tax audits across the UAE in 2026, especially after the implementation of Corporate Tax. Whether you’re an SME, freelancer, or Freezone company, staying audit-ready is now essential.
An FTA audit reviews your VAT records, Corporate Tax filings, accounting books, and compliance with UAE tax laws. At MHK Accounting & Taxation Services LLC, we help businesses prepare, organize documents, and avoid penalties before an audit happens.
1. What Is an FTA Tax Audit?
An FTA audit is an official examination of a business’s VAT, Corporate Tax, accounting records, bank statements, and financial documentation to ensure:
- Accurate VAT & tax filings
- No under-reported or over-claimed taxes
- Proper record-keeping
- Compliance with FTA rules
Audits can happen anytime without prior notice, usually covering 5 years of financial records.
2. Why Businesses Get Selected for an FTA Audit
Common reasons include:
- Frequent late VAT or Corporate Tax filings
- High VAT refund claims
- Mismatched invoices
- Sudden revenue fluctuations
- Non-compliance signals from banks
- Industry-wide inspections
3. FTA Audit Preparation Checklist (2026)
To stay 100% compliant, businesses must keep the following ready:
3.1 VAT Records
- Tax invoices (issued & received)
- Sales & purchase reports
- VAT return filings
- Import & export documents
- Credit/debit notes
3.2 Corporate Tax Records
- Financial statements
- Trial balance
- Tax-adjusted profit
- Capital expenditure records
- Transfer pricing (if applicable)
3.3 Accounting Records
- General ledger
- Expense & payroll data
- Bank statements
- Fixed assets register
- Cash flow reports
3.4 Legal Documentation
- Trade license
- MOA / AOA
- Lease agreement
- Bank IBAN confirmation
- Customs registration
4. What Happens During an FTA Audit?
The FTA may:
- Request access to your accounting software
- Visit your office physically
- Demand explanation of transactions
- Recalculate VAT or Corporate Tax
- Cross-check supplier invoices
Timeframe:
5–20 working days depending on company size.
5. Penalties for Non-Compliance (2026 Updates)
| Violation | Penalty (AED) |
|---|---|
| Late VAT filing | 1,000 – 2,000 |
| Incorrect tax return | 50% of unpaid tax |
| Failure to register | Up to 10,000 |
| Missing tax invoices | 2,500 per invoice |
| Late Corporate Tax filing | 10,000 |
| Failure to keep records | 10,000 – 50,000 |
FTA penalties are now stricter in 2026, especially for missing documentation.
7. How MHK Helps Businesses Stay Audit-Ready
At MHK Accounting & Taxation UAE, we offer:
✅ Pre-audit compliance checks
✅ VAT & Corporate Tax reconciliation
✅ Review of financial statements
✅ Organizing 5-year documentation
✅ FTA audit support and representation
✅ Full bookkeeping + digital records setup
Conclusion
FTA audits are becoming stricter in the UAE, but with proper records, clean financial systems, and expert support, any business can stay 100% compliant and penalty-free. Preparing today avoids costly mistakes tomorrow.
1. How often does the FTA conduct audits?
Audits can occur anytime and typically cover 5 years of VAT, Corporate Tax, and accounting records.
2. What documents are required for an FTA audit?
VAT invoices, bank statements, ledgers, tax returns, financial statements, and compliance records.
3. How long does an FTA audit take?
Between 5–20 working days depending on business size and record quality.
4. What happens if mistakes are found?
The FTA may revise returns, impose penalties, or request revised financial statements.
5. Can MHK assist during an FTA audit?
Yes — MHK provides full audit preparation, documentation assistance, VAT reconciliation, and FTA audit representation.
References
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