How to Prepare for a Customs Audit in UAE
In recent months, the tax authorities have started conducting customs audits on imports and exports. The Federal Customs Jurisdiction has been given authority by the UAE government to check customs-related and commercial papers connected to the import of items. In consequence, it is a must for taxable businesses to comply with rules and regulations. If your company is scheduled for a customs audit in the United Arab Emirates, you should contact an audit firm in Dubai, UAE.
Customs Duty In the UAE
The custom tariff specifies whether goods or the products imported into a nation are subject to a customs duty. And they are gathered at the first entrance point.
The customs duty on the imported goods is fixed and the customs duty is 5% of the value of the goods plus the cost of freight insurance.
The UAE has adopted a GCC common tariff in general, with customs taxes set at 5% of the CIF (Cost, Insurance, Freight) value of most goods. However, this varies with certain goods.
CIF is an international shipping agreement where the charges are paid by a seller to cover the costs, insurance, and freight of a buyer’s order while the cargo is in transit.
Customs Duty in UAE on Foreign Goods:
-5% of CIF value of most products
-50% Customs Duty – Alcoholic, Carbonated, and Sweetened Beverages
-100% Customs Duty – Tobacco Products
Audits can be done on both imports and exports. Customs officers often perform audits using audit authorities granted by the Customs and Excise Department. The two types of auditing, Internal Auditing and External Auditing, and Income Tax : All these should be taken into consideration when you are preparing your business for customs audit in UAE.
During a customs audit in the UAE, the tax authority will frequently send a request for specifics to be addressed. This means you won’t have to worry about every detail of your customs reports; instead, you can concentrate on the products that are being investigated. It will be in these areas that auditors will be interested, therefore you must be prepared to respond to their questions.
There are common documents that you should provide for the Auditor. Taxable entities may be required to provide the following papers from the preceding five years by the Federal Customs Authority:
-Sale and purchase journal
-Entries on import and export
-Stock reports / inventory reports
-VAT accounting records
-Bank Statements, Transfer slips, and Deposit slips
KLOUDAC, an audit firm in the UAE, will provide a guide that covers the tax authority’s areas of interest and provide information that will be quite useful for your customs audit.
Customs Audit Checklist
Listed below is the checklist you must be prepared with:
-Make an appointment with your customs Auditor: Contact one our auditors and inform them that you are being audited then they will make the necessary arrangements for the process.
-Gather the required information: Investigate all transactions that are needed to the audit’s main focus. All necessary documents, VAT returns, invoices, and receipts should be conveniently accessible. Please note that your records must be kept for five years from the date of the customs transaction.
-Consider reporting any errors immediately
-Be prepared for the following questions :
1.Do you have a customs strategy being overseen by a dedicated person or department?
2.Do you have risk management and compliance plans in place?
3.Do you know the total annual amount of duty and VAT paid by your business?
4.Do you know the annual value of your imports?
5.Do you know the latest regulations on tariffs and their classifications?
6.Do you know every step of your supply chain?
-Attend the CBP interview : Make sure to understand their questions properly and answer them directly.
KLOUDAC Accounting Firm Dubai, UAE
KLOUDAC is a recognized accounting firms in Dubai, UAE with 15 years of service experience. We have built connections with over 500 customers. It has also won the certification of Xero Payroll and certification of Xero advisor from the world leading online accounting software – XERO. Moreover, KLOUDAC is a golden champion partner of Xero. Accounting and Bookkeeping is more convenient for the SMEs via KLOUDAC since they provide their clients with a whole package of services such as Financial Consultancy, Business setup, Audit and assurance services, Taxation services, Recognized accounting software and more.