Tax audit or in other words VAT audit, can be conducted whenever the government wishes to examine the company’s records and documents. VAT audit in OMAN involves a detailed procedure in which the authorities will check the returns and other details,

FTA audit procedure

• Means of Notification and Correspondence by the Authority.
  By Post /Registered post or By electronic mail to the address provided by the Person to be notified. Posting on the premises of the Taxable Person or Any other means as may be agreed by the Person and the Authority
• Right to Conduct Tax Audit:
  • • For the purposes of conducting a Tax Audit, the Authority 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.
    • For the purposes of implementing provisions of Clause (4) of Article (17) of this Law, the Tax Auditor shall obtain the prior written consent of the Director-General, as well as a permit from the Public Prosecutor to be able to enter the part of the Premises where the Premises or parts thereof are used as a dwelling.
    • For the purposes of implementing Clause (1) of this Article, the occupational tenant of the Premises, or in the absence of the occupational tenant, any Person the Authority considers as having control over the Premises, shall provide the Authority with all reasonable facilities necessary for the effective exercise of its powers under this Article.
• Notice of Audit

1. Any notice of a Tax Audit sent by the Authority shall state the possible consequences of obstructing the Tax Auditor in the exercise of his duty.
2. Where a Tax Auditor is assigned to carry out a Tax Audit according to Clause (4) of Article (17) of this Law, 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

3. Any other official of the Authority whom a Tax Auditor considers necessary for the effective exercise of his powers under this Decision may accompany the Tax Auditor to any Premises.

4. A Tax Auditor carrying out a Tax Audit at the Premises of a Person based on a permission of the public prosecutor according to Article (12) of this Decision, shall present the permit issued by the Authority 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.

As per Article (78) of  Federal Decree-Law Records to Be Maintained for a Tax Audit are:

• • • Records of all supplies and Imports of Goods and Services.
    • All Tax Invoices and alternative documents related to receiving Goods or Services.
    • All Tax Credit Notes and alternative documents received.
    • All Tax Invoices and alternative documents issued.
    • All Tax Credit Notes and alternative documents issued.
    • Records of Goods and Services that have been disposed of or used for matters not related to Business, showing Taxes paid for the same.
    • Records of Goods and Services purchased and for which the Input Tax was not deducted.
    • Records of exported Goods and Services.
    • Records of adjustments or corrections made to accounts or Tax Invoices.
    • Details of Goods imported to the state along with Customs declarations and Supplier Invoices.

This list is not exhaustive one but just superficial, FTA can demand any further document as they may deem fit during the course of an audit to ascertain the tax obligations.

Federal Tax Authority, the ultimate constitution responsible for collection and management of federal taxes is renowned inefficiently deterring non-compliance from the part of taxpayers. Various laws and regulations issued by Ministry levy severe penalties, including prison sentences and other monetary penalties if a registrant is found guilty of non-compliance.

To avoid falling under the prospect of non-compliance of VAT, it is always better to conduct a Tax Audit review or a VAT health check-up in your organization. A VAT Audit review targets in finding out disparities in your organizational tax policies and appropriate procedures as per OMAN tax laws. It is prudent to say that Tax Audit review is rather a necessity than an option since it’ll reinforce your organization to face a VAT Audit.

VAT Audit review will help you in understanding the causes of non-compliance and address them for the past and the future. It will help you in identifying the areas which require rectification while assuring the accuracy of taxes actually remitted. FTA has set various options for taxpayers to rectify their mistakes before undertaking an assessment such as filing a Voluntary Disclosure or a Reconsideration form as the case requires.

The audit will facilitate a review of previously reported VAT returns with the intention of identifying any errors, thereby avoiding the risk of non-compliances being found by the Tax Authority itself, which can result in higher penalties for companies. Identification of errors or non-compliances at an earlier stage is essential as it allows companies to take appropriate corrective measures (such as a Voluntary Disclosure scheme where applicable) which can save the company from a higher penalty burden in the eventuality of an official tax audit by the Authority.

Due diligence checks will decrease the risk of inadvertent double payment of VAT, incorrect VAT being charged by the suppliers, etc, and further assist in reducing exposure to penalties from the Tax Authority.

Business will be prepared to face official tax audits by having all the required details ready on hand and avoid errors which may happen due to last-minute hastiness.

As compliance is thoroughly examined, the chances of fraud to be conducted by the business are greatly reduced.