What is a Voluntary Disclosure Under VAT?
Introduction
In the complex landscape of UAE VAT compliance, businesses may occasionally make errors or omissions in their tax filings. To promote transparency and encourage self-correction, the Federal Tax Authority (FTA) offers a powerful mechanism known as Voluntary Disclosure.
This explains everything you need to know about Voluntary Disclosure under UAE VAT Law, when to use it, and how to file it correctly.
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📘 Definition: What is Voluntary Disclosure?
Voluntary Disclosure (VD) is a process that allows taxpayers to inform the FTA about errors or omissions in their previously submitted:
• VAT Returns (Form 201)
• VAT Refund applications
• Tax Assessments issued by the FTA
This is done using Form 211 through the EmaraTax portal.
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⚖️ Legal Basis
Voluntary disclosure is governed under:
• Federal Decree-Law No. 8 of 2017 on VAT (as amended)
• Cabinet Decision No. 36 of 2017 on Executive Regulations
• FTA Public Clarifications (VATP021, etc.)
These laws encourage taxpayers to correct mistakes voluntarily before the FTA discovers them through audits or assessments.
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🧾 When Should You Submit a Voluntary Disclosure?
You must file a voluntary disclosure if any of the following applies and the difference in payable/refundable tax is more than AED 10,000:
1. Underreported Output VAT (e.g., missed taxable sales)
2. Overclaimed Input VAT (e.g., expenses not eligible for recovery)
3. Incorrect tax treatment (e.g., wrongly applied zero-rate or exemption)
4. Calculation errors or incorrect entries in VAT returns
5. Omissions in refund claims
For differences below AED 10,000, corrections can often be made in the next VAT return.
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📋 How to File a Voluntary Disclosure
Step-by-Step Process:
1. Log in to EmaraTax Portal
o Access your tax dashboard at: https://eservices.tax.gov.ae
2. Select Voluntary Disclosure (Form 211)
o Choose the tax period and the type of error.
3. Fill in Correct Figures
o Provide the original submitted values and the correct values.
o Explain the reason for the discrepancy.
4. Attach Supporting Documents
o Invoices, ledgers, contracts, customs documents, etc.
5. Submit the Application
o Await confirmation or request for additional info from FTA.
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💸 Are There Penalties for Voluntary Disclosure?
Yes, but lower than penalties imposed after FTA audits.
Penalties May Include:
• Fixed Penalty: AED 3,000 (first time), AED 5,000 (repeat)
• Percentage-Based Penalty:
o 5% to 40% of the tax difference depending on timing of disclosure
(earlier disclosures = lower penalties)
Timely disclosures can significantly reduce the penalty burden.
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🛡️ Benefits of Filing a Voluntary Disclosure
• Shows transparency and intent to comply
• Reduces the risk of high penalties during FTA audits
• Builds goodwill with tax authorities
• Helps correct accounting and internal processes
• Protects the business reputation and avoids litigation
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🚨 What Happens If You Don't Disclose?
If the FTA discovers the error first:
• Penalties can go up to 50% of the tax due
• Additional administrative fines and audit assessments
• Damage to compliance status and possibility of blacklisting
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🔍 Common Scenarios for VD in VAT
Scenario Disclosure Needed?
Missed sales invoice ✅ Yes
Claimed input VAT on personal expenses ✅ Yes
Error in customs value declared ✅ Yes
Small rounding error ❌ No (if under AED 10,000)
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✅ How We Can Help
Sheikh Anwar Accounting and Auditing LLC offers:
• Assessment of VAT errors
• Preparation and filing of Voluntary Disclosure (Form 211)
• Penalty mitigation strategies
• Regular VAT compliance reviews
📞 Contact us today at info@sa-auditors.com
🌐 Visit: www.sa-auditors.com
