VAT and Excise Tax Return Compliance Review Service in the UAE
A VAT and Excise Tax return compliance review is an independent, systematic examination of a business’s previously filed tax returns, accounting records, and supporting documentation — conducted before the Federal Tax Authority (FTA) initiates an audit. Its purpose is to identify errors, omissions, and compliance gaps early, so they can be corrected through a voluntary disclosure before FTA scrutiny — significantly reducing penalty exposure. At Abdelhamid & Co. Certified Public Accountants & Auditors L L C SP, we are licensed by the UAE Ministry of Economy (Local Auditors Record No. LC0106-01) and registered as a licensed FTA Tax Agent (TAN: 30003958 | TAAN: 20033908).
This service is part of our broader UAE VAT and excise tax services. It connects directly to our voluntary disclosure service, return filing service, and reconsideration requests service. Learn more about our firm and our team.
Why a VAT Compliance Review Matters
Under Cabinet Decision No. 40 of 2017 as amended (including Cabinet Decision No. 129 of 2025, effective 14 April 2026), the penalties for errors discovered by the FTA during an audit are significantly higher than those applicable when a business proactively files a voluntary disclosure:
- Before FTA audit notification (voluntary disclosure): 1% monthly penalty on the tax difference only — no fixed penalty
- After FTA audit notification (or no VD filed): 15% fixed penalty on the tax difference plus 1% monthly penalty
- Late payment surcharge: 14% per annum on any unpaid tax, applied monthly
Key Facts — VAT Compliance Review UAE
- Voluntary disclosure before audit: 1% monthly penalty only — no fixed penalty
- Error found during FTA audit: 15% fixed penalty + 1% monthly
- Late payment surcharge: 14% per annum
- Record retention required: 5 years (15 years for real estate)
- Inadequate record keeping penalty: AED 10,000 per violation (AED 20,000 repeat)
- Voluntary disclosure threshold: Errors ≥ AED 10,000 require formal VD filing
Legal Framework
The compliance review is conducted against the requirements of:
- Federal Decree-Law No. 8 of 2017 on VAT and its Executive Regulations
- Federal Decree-Law No. 7 of 2017 on Excise Tax and its Executive Regulations
- Federal Decree-Law No. 28 of 2022 on Tax Procedures
- Cabinet Decision No. 40 of 2017 on Administrative Penalties, as amended including Cabinet Decision No. 129 of 2025 (effective 14 April 2026)
- FTA Public Clarifications, VAT Guides, and sector-specific guidance published on the FTA legislation page
What the Compliance Review Covers
1. Output VAT Review
We verify that all taxable supplies have been correctly identified, classified, and reported at the right rate — standard-rated (5%), zero-rated, or exempt. We check for under-declared supplies, incorrect zero-rating claims (particularly for exports and international services), omitted supplies, and errors in the treatment of deemed supplies, gifts, and personal use.
2. Input VAT Recovery Review
We review all input VAT claimed to confirm recovery was validly supported by compliant tax invoices, that the underlying goods and services are used for taxable business purposes, and that blocked input VAT categories (entertainment, employee benefits, motor vehicles) have not been incorrectly recovered.
3. Tax Invoice Compliance
We examine issued and received tax invoices for compliance with the mandatory content requirements under the VAT Executive Regulations — including TRN, date, tax amount, and correct supplier and recipient details. Non-compliant invoices can invalidate input tax recovery.
4. Imports and Reverse-Charge Mechanism
We verify that VAT has been correctly self-accounted on imports of goods and services under the reverse-charge mechanism, and that designated zone transactions have been treated correctly under FTA guidance.
5. Excise Tax and Record-Keeping Compliance
For Excise Tax registrants, we review declarations covering taxable imports, local production, and stockpiler positions. We also assess whether the business is maintaining tax records for the minimum required period — 5 years (or 15 years for real estate transactions) — and whether documentation is sufficient to withstand FTA scrutiny.
Our VAT and Excise Tax Compliance Review Service
1. Pre-Review Planning & Scope Setting
We define the review scope based on the business’s industry, transaction volumes, and risk profile — determining which tax periods and transaction types carry the highest exposure and prioritising accordingly.
2. Detailed Compliance Testing
We conduct transaction-level testing of a representative sample of supplies, purchases, and tax invoices, cross-referencing against submitted VAT returns and the EmaraTax filing history to identify discrepancies.
3. Compliance Report & Findings
We issue a detailed written compliance report identifying all errors, omissions, and areas of risk, quantifying the tax difference and estimated penalty exposure for each issue, and recommending the appropriate corrective action.
4. Voluntary Disclosure Filing
Where the review identifies material errors requiring correction, we prepare and file the voluntary disclosure on your behalf via EmaraTax as licensed FTA Tax Agents, to take advantage of the reduced penalty regime before any FTA audit notification.
5. Post-Review Monitoring & Ongoing Compliance
Following the review and any voluntary disclosure, we provide ongoing compliance guidance to prevent recurrence — including review of internal VAT accounting processes, staff guidance, and periodic health checks aligned with VAT return filing periods.
Why Choose Abdelhamid & Co for VAT Compliance Reviews?
- Licensed FTA Tax Agent — TAN: 30003958 | TAAN: 20033908
- Licensed by the UAE Ministry of Economy — Local Auditors Record No. LC0106-01
- End-to-end service: review → report → voluntary disclosure via EmaraTax
- UAECA | IACPA | EAAA Fellow (124) | IASCA Fellow (1361) credentials
- Up-to-date knowledge of penalty framework including Cabinet Decision No. 129 of 2025 (effective 14 April 2026)
- Covers VAT and Excise Tax across all business sectors and Free Zones
- FTA audit defence support where needed
- Bilingual team — Arabic and English
- Transparent, fixed-fee engagements
Frequently Asked Questions — UAE VAT Compliance Review
What is the difference between a VAT compliance review and an FTA audit?
A compliance review is a voluntary, internal examination conducted by your tax agent before the FTA initiates any audit. An FTA audit is an official examination initiated by the FTA with formal powers to access records, issue assessments, and impose penalties. The key advantage of a compliance review is that errors discovered can be corrected via voluntary disclosure under a significantly lower penalty regime.
How often should a business conduct a VAT compliance review?
For most businesses, an annual compliance review covering the preceding four quarterly VAT return periods is prudent. Higher-risk businesses — those with complex supply chains, large transaction volumes, or recent changes in business activity — may benefit from more frequent reviews.
What is the financial benefit of finding errors before an FTA audit?
Under Cabinet Decision No. 129 of 2025 (effective 14 April 2026), a voluntary disclosure filed before FTA audit notification attracts only a 1% monthly penalty on the tax difference. If the same error is found by the FTA during an audit, an additional 15% fixed penalty applies on top of the monthly penalty. On a tax difference of AED 100,000, this is a saving of AED 15,000 in fixed penalties alone.
What records does the FTA require businesses to maintain?
VAT-registered businesses must maintain all tax records — including tax invoices, import documents, contracts, and accounting records — for a minimum of 5 years from the end of the relevant tax period. For real estate transactions, the retention period is 15 years. Failure to maintain adequate records carries a penalty of AED 10,000 per violation (AED 20,000 for repeat violations).
Can a compliance review help with input VAT recovery?
Yes. A key part of the compliance review is identifying input VAT that may have been under-claimed — for example, due to missing invoices, incorrect blocking of input tax, or failure to claim on legitimate business expenses. Recovering under-claimed input VAT reduces the net VAT payable position.
Does the review cover Excise Tax as well as VAT?
Yes. Where the client is registered for Excise Tax, our compliance review covers both VAT and Excise Tax returns, declarations, and records in the same engagement.
What triggers an FTA audit in the UAE?
The FTA may select businesses for audit based on risk profiling, inconsistencies in filed returns, large or unusual refund claims, industry sector patterns, or random selection. A proactive compliance review is the most effective way to address potential risk areas before the FTA initiates contact.
Related Services
- VAT and Excise Tax Voluntary Disclosure Service
- VAT and Excise Tax Return Filing Service
- VAT and Excise Tax Registration Service
- VAT Reconsideration Requests Service
Contact Us for VAT Compliance Review Services in the UAE
📞 Phone / WhatsApp: +971 50 794 8028
📞 Direct: +971 065 289 414
🌐 Office: Sharjah, Al Qasimia, Omran Tower, Office 302
Abdelhamid & Co. Certified Public Accountants & Auditors L L C SP — Licensed by the UAE Ministry of Economy (LC0106-01) | Licensed FTA Tax Agent (TAN: 30003958 | TAAN: 20033908)
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Last reviewed: April 2026. Content reflects UAE tax law and regulations as at the date of review.
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