VAT Voluntary Disclosure in the UAE
Even if the businesses are well managed, there will be mistakes in VAT compliance. Mistakes are common, but what matters is how quickly and correctly those mistakes are rectified
Under the UAE VAT Law, there is a specific mechanism called Voluntary Disclosure. This allows businesses to correct the errors or omissions made in the previously filed returns, mistakes made on the assessment of tax or refund applications. But it should be submitted before the Federal Tax Authority (FTA) identifies the same.
This blog explains what VAT voluntary disclosure is, when it will be mandatory, how to file the, and common mistakes businesses must avoid to stay compliant.
Disclaimer: The examples used in this blog are fictional and provided solely for educational purposes.
Legal Basis for VAT Voluntary Disclosure
The mechanism of VAT voluntary disclosure is governed by:
- Federal Decree-Law No. 28 of 2022 on Tax Procedures
- Federal Decree-Law No. 8 of 2017 on VAT
- FTA Public Clarifications and Guides
As per the Tax Procedures Law, a taxable person must submit a voluntary disclosure if they identify an error or omission that impacts their tax position.
What Is VAT Voluntary Disclosure?
A Voluntary Disclosure is a formal submission under the UAE VAT Law, which can be filed through the Emara Tax portal in order to :
- Correct those errors in the previously submitted VAT return
- To make the necessary changes to the incorrect VAT treatment
- To adjust the output VAT liability or the input VAT
- Rectify mistakes on VAT refund claims
It ensures transparency for the business and reduces the risk of getting higher penalties.
When Is VAT Voluntary Disclosure Mandatory?
It is mandatory for the businesses to submit a voluntary disclosure if:
- The amount of VAT liability was understated
- VAT on expenses (ie, Input VAT) was overstated
- Incorrect treatment of VAT rates (zero-rated vs standard-rated)
- Failure to report VAT under the Reverse charge
- Wrongly claimed Input VAT
Key Threshold Rule
If the error made on the tax returns results in a tax difference exceeding AED 10,000, submission of a voluntary disclosure is mandatory.
How to File VAT Voluntary Disclosure in the UAE: 2026 Step-by-Step Guide
1️ First, log in to your Emara Tax portal
2️ Select the relevant tax type (VAT)
3️ Choose the tax period in which the error was made
4️ Enter corrected VAT figures
5️ Upload supporting documents for the corrections
6️ Submit and pay for the additional VAT due, if any
Once submitted, the FTA will review and issue an amended assessment if deemed necessary.
Practical Examples
Example 1 – Underreported Output VAT
A trading company mistakenly treated their local supplies as zero-rated instead of the standard rate. As a result
➡ Applicable VAT understated by AED 85,000
➡ For rectifying the same, a Voluntary disclosure was submitted
➡ Potential Penalty got reduced significantly
Example 2 – Incorrect Input VAT Claim
A consultancy firm claimed input VAT credit on the entertainment expenses.
➡ As entertainment expenses are not an allowable expense under UAE vat, the input claimed will be disallowed
➡ Voluntary Disclosure filed to reverse input claim
➡ Penalty avoided due to the correction made on time
Common VAT Errors Leading to Voluntary Disclosure
- Application of incorrect VAT rate
- Failure to report VAT on a reverse charge basis
- Claiming input VAT, which is blocked as per the Law
- Treatment of the incorrect place of supply
- Errors while making VAT adjustments
- Duplicate or missed invoices
Penalties Related to Voluntary Disclosure
|
Scenario |
Penalty Exposure |
|
Errors identified by Tax payers |
Lower penalties |
|
Errors identified by FTA |
Higher penalties |
|
Delay in submitting VD |
Increased penalty |
|
Non – Cooperation on FTA audits |
Administrative fines |
Submitting disclosure before identification of errors by FTA caan reduce penalties by up to 70% in certain cases.
Best Practices for VAT Voluntary Disclosure
✔ Conduct periodic VAT assessments
✔ Identify errors without delay
✔ Make proper reconciliations before return filing
✔ Maintain adequate supporting documents
✔ Seek for professional advice and review before making a submission
Key note:
As per FTA decision no. 8 of 2024, there are situations specified where the voluntary disclosure is required even if there is no change in VAT payable which are as below;
- Wrong reporting of zero-rated supplies
- Wrong reporting of exempt supplies
- Wrong emirate-wise reporting
How a Flyingcolour Tax Consultant Can Help
We assist businesses with:
✔ Identification of VAT error
✔ Preparation of Voluntary disclosures and filing
✔ Penalty mitigation strategies
✔ FTA correspondence & audits
✔ Ongoing VAT compliance reviews
Frequently Asked Questions (FAQs)
1. Is VAT voluntary disclosure compulsory in the UAE?
Yes, if an error which will impact the tax liability or refund by more than AED 10,000.
2. Can voluntary disclosure reduce VAT penalties?
Yes. Making submission of early disclosure significantly reduces penalties compared to the situations where FTA-detected errors.
3. Can I file a voluntary disclosure for multiple periods?
Yes, disclosures can be filed separately for each tax period on which mistakes are identified.
4. Can VAT voluntary disclosure trigger an FTA audit?
It may, but non-disclosure carries more higher risk than submitting disclosure.
5. Can a tax agent submit a voluntary disclosure on my behalf?
Yes. Registered tax agents can submit and manage disclosures on behalf of tax payers via Emara Tax portal.
To learn more about VAT Voluntary Disclosure in the UAE: When, Why, and How to Do It Correctly, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.