Key takeaways
- An FTA VAT audit must be preceded by at least 10 business days of written notice, except in narrow cases such as suspected tax evasion, where auditors can enter without notice with the Director General's written consent.
- Auditors can inspect your premises, documents, electronic records and accounting systems, and failing to assist them carries a penalty of AED 20,000.
- The FTA must tell you the audit result within 10 business days, and any resulting tax assessment can be challenged within 40 business days of notification.
- Since 14 April 2026, a VAT error not disclosed before the FTA's audit notice costs a fixed 15% of the tax difference plus 1% a month, down from 50%.
- The FTA can generally audit a VAT period for five years after it ends, or 15 years in tax evasion cases, so deregistering doesn't end audit exposure.
How does an FTA VAT audit start?
The FTA starts a VAT audit by notifying you at least 10 business days before auditors begin work, through the address registered on your FTA tax record. That period comes from Article 16 of Federal Decree-Law No. 28 of 2022 on Tax Procedures and Article 16 of its Executive Regulation (Cabinet Decision No. 74 of 2023), and the notice must also set out the consequences of obstructing the auditor.
Whether to audit you is the FTA's decision alone, and you can't challenge it. The audit can take place at the FTA's premises, at your place of business or wherever you keep goods or records.
Notice can be skipped in narrow cases. With the Director General's prior written consent, an auditor can enter without notice and close the premises for up to 72 hours if the FTA has serious grounds to suspect tax evasion or believes leaving the place open would hinder the audit. A residence needs a Public Prosecution permit as well.
What does the FTA inspect during a VAT audit?
Auditors can inspect your premises, your documents and assets on site, your electronically stored data and the accounting systems you use. Article 17 of the Decree-Law also lets them take originals or copies of records and samples of goods, devices or other assets.
When the FTA asks for information, you must supply it within the period, in the form and at the place stated in its notification. Documents go to the FTA in Arabic by default, and you pay for any translation it requests (Article 5). You carry the burden of proving that a VAT return is accurate, while in tax evasion cases it sits with the FTA (Article 51).
What rights do you have during an FTA audit?
Article 21 of Federal Decree-Law No. 28 of 2022 gives an audited person four rights:
- Ask the tax auditor to show a job identification card.
- Obtain a copy of the audit notification.
- Attend any audit that takes place outside the FTA's premises.
- Obtain copies of original paper or digital documents the FTA seizes or obtains during the audit.
Against those rights sits a duty: you, your tax agent or your legal representative must assist the auditor (Article 20). A tax agent must be on the FTA's Register of Tax Agents, and your own responsibility under the law doesn't go away (Articles 12 and 14).
What happens after the audit ends, and how do you challenge the result?
The FTA must notify you of the audit result within 10 business days of the audit ending, and if it finds a shortfall it issues a Tax Assessment, notified within 10 business days of issue.
| Stage | Filed with | Deadline to file | Decision time |
|---|---|---|---|
| Tax assessment review request | FTA | 40 business days from notification of the assessment | FTA decides within 40 business days |
| Reconsideration request | FTA | 40 business days from notification of the decision or assessment | FTA decides within 40 business days |
| Objection | Tax Disputes Resolution Committee | 40 business days from the FTA's reconsideration decision | Committee decides within 20 business days |
| Court appeal | Competent federal court | 40 business days from the Committee's decision | Court's own timetable |
Source: Federal Decree-Law No. 28 of 2022, Articles 28, 29, 32, 33 and 36, checked 13 November 2026.
The order matters. The Committee won't accept an objection unless you filed a reconsideration request first and paid the tax in full, and the court rejects an appeal without proof of full tax payment and at least 50% of the penalties settled in cash or by an approved bank guarantee.
What penalties can an FTA VAT audit lead to?
A VAT audit adds the tax you owe plus administrative penalties. Since 14 April 2026 the main audit-related penalty is a fixed 15% of the tax difference, plus 1% a month, for an error you hadn't disclosed before the FTA's audit notice.
| Violation | Penalty (as of 13 November 2026) | Reference |
|---|---|---|
| VAT error not disclosed before the FTA notifies you of an audit | Fixed 15% of the tax difference, plus 1% per month or part month | Table 1, item 12 |
| Voluntary disclosure of a return error | 1% of the tax difference per month or part month until filed | Table 1, item 11 |
| Not assisting the tax auditor | AED 20,000, due from the own funds of the person concerned | Table 1, item 13 |
| Not keeping required records | AED 10,000; AED 20,000 for a repeat within 24 months | Table 1, item 1 |
| Paying assessed tax late | 14% a year, charged monthly from the day after the due date | Table 1, item 9 |
Source: Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 129 of 2025 (in force from 14 April 2026), checked 13 November 2026. Any administrative penalty is also capped at twice the tax it relates to (Federal Decree-Law No. 28 of 2022, Article 24).
The monthly element is why timing matters. In a hypothetical AED 100,000 understatement, a voluntary disclosure in month 4, before any audit notice, costs AED 4,000 (1% x 4 months x AED 100,000). After a notice, the fixed 15% alone adds AED 15,000 before the monthly charge. If your error dates from before 14 April 2026, confirm with the FTA which penalty table applies.
How far back can the FTA audit a VAT period?
The FTA can generally audit or assess a VAT period up to five years after the end of that tax period, and up to 15 years where tax evasion is involved. Federal Decree-Law No. 17 of 2025 replaced Article 46 of the Tax Procedures Law with effect from 1 January 2026, and the Ministry of Finance says the FTA keeps the power to audit or assess after the period expires in certain cases, such as refund requests submitted in the final year.
Deregistering from VAT, changing accountant or switching bookkeeping software doesn't reset or end that window, so keep records that cover it.
15%: fixed penalty on the tax difference for a VAT error not disclosed before the FTA notifies you of an audit, plus 1% a month (down from 50%). Source: Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 129 of 2025, Table 1 item 12, in force from 14 April 2026, checked 13 November 2026.
What most guides don't tell you
- A notice counts as delivered once the FTA sends it to your registered address, whether or not anyone reads it (Article 11). Out-of-date contact details on EmaraTax can start the 10-business-day clock unseen.
- The audit notice is the cliff edge for penalties. Catching an error before the notice is the cheapest fix, and that starts with knowing which filings fall due when; the free UAE compliance calendar lists them for your company.
- A finished audit isn't a clearance. Article 19 of the Decree-Law lets the FTA audit a matter again if new information surfaces that could change the outcome.
- Cash gets tied up twice. While you're under audit, the FTA may decline to refund a residual credit, subject to conditions set by its board (Article 39), and any challenge beyond the FTA requires you to pay the tax in full first.
Which deadlines apply to your company?
Disclosing an error before the FTA's audit notice is far cheaper than being found out, and that begins with knowing your filing dates. The UAE compliance calendar lists your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file: get your free compliance calendar.
Frequently asked questions
How do I deregister from VAT?
You apply to the FTA once you meet the deregistration conditions in the VAT Law, because filing late costs AED 1,000 a month up to a maximum of AED 10,000. Deregistering doesn't close the audit window for earlier periods, which stays open for five years from the end of each tax period.
How do I respond to an FTA clarification request?
Reply by the deadline, in the form and to the place stated in the FTA's notification, with supporting documents and an Arabic translation if the FTA asks for one. In an audit, not assisting the auditor carries a penalty of AED 20,000.
Can I appeal a VAT penalty?
Yes. You can ask the FTA to review the penalty or reconsider the decision within 40 business days of being notified, then object to the Tax Disputes Resolution Committee within 40 business days of the FTA's reconsideration decision. The Committee only accepts the objection if you filed a reconsideration request first and paid the tax in full.
How do I apply for a VAT penalty waiver or reconsideration?
File a reconsideration request with the FTA, in the form and manner it specifies and with your reasons, within 40 business days of being notified of the decision. Article 50 also lets an FTA committee approve instalments or a waiver of penalties under Cabinet-set controls, but the criteria sit outside the law itself, so check the FTA's current guidance first.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
Official sources:
- Federal Decree-Law No. 28 of 2022 on Tax Procedures, consolidated text (Ministry of Finance)
- Ministry of Finance: amendments to the Tax Procedures Law from 1 January 2026 (Federal Decree-Law No. 17 of 2025)
- Cabinet Decision No. 74 of 2023, Executive Regulation of the Tax Procedures Law (FTA)
- Cabinet Decision No. 40 of 2017 and its amendments, including Cabinet Decision No. 129 of 2025 (Ministry of Finance)
- FTA announcement that the amended administrative penalties took effect, 15 April 2026
Interpretation used alongside the official texts:
- PwC Middle East: revised administrative penalty framework (Cabinet Decision No. 129 of 2025)
- Habib Al Mulla and Partners: analysis of Federal Decree-Law No. 17 of 2025
- DLA Piper: amendments to the Executive Regulation effective 1 April 2026 (Cabinet Decision No. 17 of 2026)
Last checked: 13 November 2026
General information, not tax or legal advice for your specific situation.