Voluntary disclosure of VAT in the UAE
The Federal Tax Authority (FTA) encourages individuals and businesses to apply VAT accurately to goods and services. If a company fails to comply with UAE tax laws, it is liable to pay heavy fines for non-compliance. However, the regulatory authority provides an opportunity to correct mistakes by submitting a voluntary VAT disclosure in the UAE. This is a proactive approach to inform the FTA of any error in tax payment or collection. Our well-qualified tax experts in Dubai are committed to assisting businesses with filing VAT voluntary disclosures and protecting them from unnecessary penalties.
What is a VAT voluntary disclosure?
A VAT voluntary disclosure is an official form provided by the Federal Tax Authority (FTA). It allows registered businesses to notify the authorities of errors, inaccuracies, and changes when filing a VAT return or claiming a VAT refund in Dubai. The taxable person must complete the “VAT211” together with all supporting documents within 20 working days of discovering the error. Here we will look at the FTA’s voluntary disclosure guide on filing and submission.
Is VAT voluntary disclosure required in the UAE?
According to the Federal Law No. 7 of 2017 on Tax Procedures, as well as the Cabinet Decision No. 36 of 2017 on the Enforcement Regulations regarding the Federal Law No. 7 on Tax Procedures, every registered entity is required to submit a voluntary disclosure to the FTA if the entity realizes that it has not paid the correct amount of tax. The Federal Tax Authority has a team of VAT expert auditors who identify tax errors through tax calculations and tax audits. Business owners are advised to notify the authorities before they impose penalties for non-compliance. Timely submission of the VAT Voluntary Disclosure Form 211 will reduce the number of fines. Voluntary disclosure of VAT also promotes good relations with the tax authorities.
Conditions for voluntary disclosure of VAT
According to Article 8 of the Cabinet Decision No. 36 of 2017 on the Implementing Rules of the Federal Law No. (7) of 2017 on Tax Procedures, a company must submit a VAT voluntary disclosure in the following circumstances:
1-If a person or business finds inaccuracy in its tax return or VAT declaration, in particular, if the tax due is less than required. If the amount exceeds AED 10 000, in this situation the company must rectify a VAT return by making a voluntary disclosure to the FTA.
2-If a registered company detects errors in its tax assessment or VAT return, in particular, if the tax payable is less than required. Not more than AED 10 000, the company may rectify the error in next VAT Return with the relevant authorities to correct the errors.
3-Once the taxpayer becomes aware that a tax refund claim has been submitted incorrectly and the refund amount is higher than the correct amount. So the person has to notify the authority before the FTA collects the VAT penalty and the non-compliance penalty.
Entities not subject to voluntary disclosure of VAT
Business entities are not required to file a voluntary disclosure for VAT where the tax payable does not exceed AED 10 000, the taxpayer can correct the error in the next tax return.
VAT voluntary disclosure deadlines
All businesses established in the United Arab Emirates may apply for a VAT voluntary disclosure within a time limit set by the FTA. The taxpayer must submit a VAT voluntary disclosure within 20 working days from the date on which he became aware of such errors.
How to submit a voluntary VAT return in the UAE
The Voluntary Disclosure Form can be submitted online via the VAT e-services section of the Federal Tax Authority’s website. The VAT Voluntary Disclosure 201 form is displayed. Simply click on the ‘Submit Voluntary Disclosure’ button. The form contains pre-populated fields with basic information on the taxable person and the tax period. The applicant should attach the verified supporting documents together with updated VAT refund/return information. The authorities may request additional information by e-mail. This is a critical process as if the taxable person does not submit a voluntary declaration, the authorities will not accept an appeal and will apply an additional penalty on top of this.
Use our VAT advisers
It is essential for business owners to understand the VAT laws in the United Arab Emirates. However, if a taxpayer finds errors and omissions in their VAT return/refund, this is an excellent opportunity to notify the authorities before the FTA approaches you. In this situation, you can hire our VAT consultants to avoid penalties. Bestax chartered accountants and VAT consultants in Dubai will help you prepare and submit your application for voluntary disclosure of VAT. Our tax consultants have good knowledge and experience in filing VAT returns and calculating VAT refunds. Our team of experts checks all your previous records looks into the errors and informs the authorities in the best possible way. We assist you in all subsequent matters until the FTA approves your application. Contact us today to protect your business from penalties!