All You Need to Know About Voluntary Disclosure

Tax compliance is a crucial aspect of running a business in the UAE, especially when it comes to Value Added Tax (VAT). Despite best efforts, errors can sometimes occur in VAT filings, and when they do, businesses have the option to correct them through a Voluntary Disclosure (VD). But what exactly is a voluntary disclosure, and when should you file one? Here’s everything you need to know.

What is a Voluntary Disclosure?

A Voluntary Disclosure (VD) is a mechanism provided by the Federal Tax Authority (FTA) that allows businesses to correct mistakes in their VAT returns, tax assessments, or refund applications. This process helps businesses maintain compliance and avoid potential penalties for undisclosed errors.

When Should You File a Voluntary Disclosure?

Businesses must submit a VD in the following cases:

1. Underpaid or Overpaid VAT
   • If you mistakenly underpaid VAT, you must correct the error to avoid penalties.
   • If you overpaid VAT, you can reclaim the excess amount through a VD.
2. Errors in Tax Returns
   • If a miscalculation or omission affects the payable tax by more than AED 10,000, a VD is mandatory within 20 business days of discovering the error.
   • If the difference is less than AED 10,000, you can correct it in the next tax return, unless instructed otherwise by the FTA.
3. Incorrect Tax Refund Applications
   • If you submitted an incorrect VAT refund request, filing a VD allows you to rectify the mistake and claim the correct refund.

How do you file a voluntary disclosure in the UAE?

The voluntary disclosure process is straightforward:

1. Log in to the FTA’s e-Services portal
2. Access the Voluntary Disclosure form (VAT211)
3. Provide details of the error and attach supporting documents
4. Submit the form and pay any outstanding tax amount (if applicable)
5. Monitor updates from the FTA regarding your submission

Stay Compliant with Kloudac’s VAT Experts

Navigating VAT compliance in the UAE can be complex, but with Kloudac’s expert VAT services, your business stays on the right track. From VAT registration and return filing to tax planning and audit support, we handle it all with precision and expertise. Our team ensures accurate calculations, timely submissions, and full compliance with FTA regulations, helping you avoid penalties and focus on growing your business. Whether