Criteria for initiating Tax audit by the FTA
- Following issues are taken into account when the FTA decides on whether or not to conduct a Tax Audit on a Person:
- That a Tax Audit is necessary for protecting the integrity of the Tax system.
- The responsibility of the Person, or anyone associated with him, to comply with the Law and Tax Law.
- The likely Tax revenue at stake, and the administrative and compliance burdens on both the Person and the FTA resulting from performing a Tax Audit.
- If the FTA decides to re-audit a business, it shall take into consideration the results of the previous Tax Audit, any new information or data, which are likely to change the FTA’s position.
Can any person who is being audited or tax agent challenge the decision of the FTA?
A decision by the FTA to conduct a Tax Audit may not be challenged by any Person.
Communication of Tax audit by the FTA
If the FTA decides to perform a Tax Audit at the place of Business of the Person subject to the Tax Audit or any other place where such Person conducts his Business, stores goods or keeps records, the FTA shall inform him at least five business days prior to the Tax Audit.
Any notice of a Tax Audit sent by the FTA shall state the possible consequences of obstructing the Tax Auditor in the exercise of his duty. The FTA shall execute the Notification by any of the following means:
- Registered post.
- By electronic mail to the address provided by the Person being notified.
- Posting on the premises of the Taxable Person
- Any other means as may be agreed by the Person and the FTA.
If the FTA considers that notifying the unregistered person by the means mentioned above is not practical, the Notification may be made by posting a notice in a printed or written form at the Premises at which a Tax Audit is to be conducted.
The FTA may use any of the following contact addresses for a Person, according to the cases mentioned:
- For delivery by post or registered post: the address provided by the Person to the FTA, or the address of their usual or last known place of residence or business may be used.
- In case of natural Person: the email address that they have provided to the FTA or the Person’s last known email address may be used.
- In case of legal Person: the email address shall be used in the following order:
- The email address that they have provided to the FTA.
- The email address of any Person acting in favour or on behalf of the Person being notified concerning the relevant matter.
- The last known email address of a Person acting in favour or on behalf of the Person being notified concerning the relevant matter.
- Any other email address of another Person, if there are reasonable grounds to suppose that that Legal Person will receive the Notification through that other Person.
Tax audit without communication
The Tax Auditor has the right of entry to any place where the Person subject to the Tax Audit conducts his Business, stores goods, or keeps records, and as the case may be, it will be temporarily closed in order to perform the Tax Audit for a period not exceeding 72 hours without prior notice in any of the following cases:
- If the FTA has serious grounds to believe that the Person subject to the Tax Audit is participating or involved in Tax Evasion in respect to this Person or another Person;
- If the FTA has serious grounds to believe that not temporarily closing the place where the Tax Audit is conducted will hinder the conduct of the Tax Audit;
In all cases provided above, the Tax Auditor shall obtain the prior written consent of the Director-General; and if the place to be accessed is a place of residence, then a permit from the Public Prosecutor shall also be obtained.
Where a Tax Auditor is assigned to carry out a Tax Audit without giving communication, he shall provide a notice in writing at the beginning of the Tax Audit to the following:
- The occupational tenant of the Premises if he is present at the time of beginning the Tax Audit.
- The Person who appears to be in charge of the Premises if he is present and the occupational tenant is not present.
- In any other case, the notice shall be posted on a prominent place in the Premises.
Show of permit
A Tax Auditor carrying out a Tax Audit at the Premises of a Person based on a permission of the public prosecutor, shall present the permit issued by the FTA as well as the permit obtained from the public prosecutor, in addition to the proof of identity every time he is requested to do so.
For the purposes of making a communication, the FTA may communicate with either of the following:
- The relevant Person.
- The Tax Agent or Legal Representative of the Taxable Person.
Inspection of data and records
The occupational tenant of the Premises, or in the absence of the occupational tenant, any Person the FTA considers as having control over the Premises, shall provide the FTA with all reasonable facilities necessary for the effective exercise of its powers.
For the purposes of conducting a Tax Audit, the FTA may inspect:
- The Premises.
- The Documents available at the Premises.
- The Assets that are available at the Premises.
- The accounting systems used by the Person subject to Tax Audit.
The FTA may perform the Tax Audit at its office or the place of business of the Person subject to the Tax Audit or any other place where such Person conducts Business, stores goods or keeps records.
Officials accompanying Tax auditor
Any other official of the FTA whom a Tax Auditor considers necessary for the effective exercise of his powers under this Decision may accompany the Tax Auditor to any Premises.
Communication post audit
The Person subject to the Tax Audit shall be notified of the results of the Tax Audit within (10) business days from the end of the audit.
Where the Person subject to the Tax Audit is notified of the results of the Tax Audit, he may request the FTA to view or obtain Documents and data on which the FTA based the assessment of Due Tax.
Such request shall be made in writing or through such other form adopted by the FTA within (20) business days from the date of the notice provided by the FTA, and shall provide the requested information within (10) business days in the following manner:
- A paper or electronic copy of the Document or data requested.
- The original Document or data requested if such Documents or data belong to the Person subject to the Tax Audit who made the request.
The FTA is not required to provide:
- Documents or data which would reveal internal correspondence or decisions made by the FTA.
- Any confidential information or data related to any other Person or Persons.
- Any Documents or data, which are known to be in possession of the Person, who is subject to the Tax Audit and made the request. In this case, the FTA shall provide the Person subject to the Tax Audit with sufficient information to enable him to identify the Documents and data requested.
Places closed under this Article shall be reopened after the lapse of 72 hours, unless the FTA obtains a permit from the Public Prosecutor to extend the closure period for a similar period prior to the expiry of the preceding 72 hours.
A criminal case may be initiated only upon an application from the Director-General.
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