What Is Voluntary VAT Disclosure?
Every business must file VAT returns on time. Sometimes, a business finds an error or an omission in a VAT return after submitting it to the Federal Tax Authority (FTA). UAE VAT law gives every VAT-registered business the right to fix mistakes using voluntary VAT disclosure. Voluntary VAT disclosure lets a business report errors honestly and update old returns.
A voluntary VAT disclosure is a process where you submit a special form (Form 211) on the FTA portal. You use this to let the FTA know about a mistake or omission in a previously filed VAT return or a refund application. This process makes sure your records stay correct and compliant with tax law.
When Can a Business Use Voluntary VAT Disclosure?
You can use voluntary VAT disclosure when you find an error in a VAT return that has a tax impact of more than AED 10,000. If the mistake is less than AED 10,000, you can fix it in your next VAT return.
Here are some cases when a business should use voluntary VAT disclosure:
- When you find a calculation mistake after you file your return
- When you notice missing invoices or data in a past VAT period
- When you find out you reported the wrong output or input VAT
- When you spot a mistake in your VAT refund application
- When you see an error that changes the amount of VAT to pay or reclaim
What Steps Do You Follow for Voluntary VAT Disclosure?
You should follow a few important steps when making a voluntary VAT disclosure:
- Log in to the FTA portal with your details.
- Go to “VAT 211-VAT voluntary disclosure/tax assessment.”
- Choose the VAT return or refund application you want to correct.
- Update the figures with the right amounts and give a clear reason.
- Upload supporting documents to show why you made the correction.
- Submit the voluntary disclosure for FTA review and wait for confirmation.
Your business should keep all related records, as FTA may ask for them in case of a review.
What Are the Penalties and Key Points for Voluntary VAT Disclosure?
The FTA sets penalties for using the voluntary VAT disclosure process. The penalty depends on the size and circumstances of the error. Here are some points to remember:
- You pay a fixed penalty for each voluntary disclosure.
- You pay a percentage-based penalty on the tax amount involved.
- More penalties apply if you file many corrections for the same return.
- Review and prepare your VAT returns carefully to avoid errors and extra penalties.
- Always ask experts for help if you’re not sure about VAT rules.
Why Should You Use Voluntary VAT Disclosure?
It’s important for businesses to use voluntary VAT disclosure if they find any mistakes. This process helps companies:
- Correct mistakes before FTA discovers them
- Reduce the risk of heavy penalties for undisclosed errors
- Show good faith and transparency with tax authorities
- Maintain clean and accurate tax records for audits
- Comply fully with UAE VAT laws
You must always keep supporting documents and reasons for your disclosure.
Best Practices to Avoid VAT Filing Errors
To avoid the need for voluntary disclosures, your business should:
- Double-check every VAT return before submitting it
- Train your finance team on UAE VAT rules
- Use accounting software that flags common errors
- Keep all tax invoices and documents well organized
- Ask a VAT expert to review your VAT returns regularly
These steps help you file correctly and reduce your penalty risks.
How Mubarak Al Ketbi (MAK) Auditing Can Help You
Mubarak Al Ketbi (MAK) Auditing gives businesses in the UAE expert help for all tax and accounting needs. We’ve got a team of professionals who know the local tax rules. We support your business with:
- Reviewing old VAT returns for errors and risks
- Preparing and submitting Form 211 for voluntary disclosure
- Advising on penalty risks and ways to reduce them
- Training your team for better VAT compliance
- Helping with routine VAT filings and accounting tasks
When it comes to VAT, “an ounce of prevention is worth a pound of cure!” Our goal is to keep your company safe from tax problems.
For More Information
- Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- Or contact/WhatsApp: +971 50 276 2132
