April 28, 2021Dated: | Byadmin admin | It is human nature to make an error while small errors can be omitted but repeated errors can be a serious concern especially when one is making a VAT return. It is important that the return being prepared meets the requirements set by the VAT laws and regulations. There are instances when because of insufficient knowledge of these laws and regulations the person can make grave mistakes while preparing a VAT return. But, this is not a valid excuse. The estimation of these blunders will be the deciding element on how you can address these mistakes.VAT Error Defined As per Federal Tax Authority or FTA a voluntary disclosure is obligation when a taxpayer makes a voluntary disclosure of an error or omission in a previous tax return application. It should be made before twenty weekdays of discovering the mistake.How a VAT Error can be corrected?First the tax payer needs to check how much is the effect of the error and what he can do to correct this error. If the value of the error is AED 10,000 or less you can correct the error through the VAT return for the period in which you have found. It can be just reflected and corrected while submitting the VAT return. Where as if the value of the error is more than AED 10,000 one needs to submit a voluntary disclosure to the FTA within 20 business days of becoming aware of the error. Taxpayer can notify FTA of an error or omission that was made in a Tax return in a form provided by FTA. Voluntary Disclosure how it is to be submitted?One can access a Voluntary disclosure form which is available in your tax portal. One can go to VAT201 – VAT Returns and click on the Submit Voluntary Disclosure. Once this is completed the system will reflect the details of the taxable system.Penalty for CorrectionsIf one is required to submit a Voluntary Disclosure, the chances are high that administrative penalties will be imposed. Cabinet Resolution No. (40) of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE, Table 1, states that two penalties will be applied:Fixed penalty of: A penalty of 3,000 AED is levied for the first time and 5,000 AED in case of recurance.Percentage based penalty shall be applicable on the amount unpaid to the Authority due to the error and will result in a tax benefit as follows: (50%) if the Person/Taxpayer makes a voluntary disclosure after being intimated of the tax audit and the Authority starting the tax audit or after being asked for information relating to the tax audit, whichever takes place first.(30%) if the Person/Taxpayer makes the voluntary disclosure after being notified of the tax audit but before the start of the tax audit.However it is only (5%) if the Person/Taxpayer makes voluntary disclosure before being intimated of the tax audit by the Authority.If you have any query related to VAT returns in UAE then feel free to call +971 4 4542366 today for a quality consultation or please send inquiry to info[at]flyingcolour[dot]com.Please Note: This article was published on 28th April 2021. The information provided in the article is based on the policies and rules applicable at the time of writing it. Talk to one of our consultants for any recent update or change.