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Complete Details About Voluntary Disclosure Under VAT in the UAE: FAQs

Complete Details About Voluntary Disclosure Under VAT in the UAE: FAQs

FAQ6 min read | Posted on April 5, 2024 | By Zoho Books Team

What is a Voluntary Disclosure?

In 2017, the UAE Federal Tax Authority (FTA) introduced Form 211. This form helps taxpayers notify the FTA of any error or omission they may have noticed in their tax returns, tax assessments, or tax refund applications that they have already submitted.

Why submit a Voluntary Disclosure?

Any error or omitted value in a tax return or tax refund application may lead to a miscalculation of your payable tax or refund amount. To rectify this and avoid any legal consequences, you must submit a Voluntary Disclosure. In some cases, you may also need to rectify an error in the tax assessment sent to you by the FTA. Whether your Voluntary Disclosure is optional or mandatory depends on whether the calculated payable tax amount is higher or lower than it should have been.

For tax returns and tax assessments:

If the calculated payable tax is more than what it should have been, submitting a Voluntary Disclosure is optional, but not required.
If the calculated payable tax is less than what it should have been, submitting a Voluntary Disclosure is mandatory.

For tax refunds:

If the calculated refund amount is more than what it should have been, submitting a Voluntary Disclosure is optional, but not required.
If the calculated refund amount is less than what it should have been, submitting a Voluntary Disclosure is mandatory.

Is there a time limit for submitting a voluntary disclosure?

The taxable individual has 20 business days to submit a Voluntary Disclosure after the date they became aware of an error in a VAT return they previously submitted.

How do I know if I need to submit a Voluntary Disclosure?

If you find an error or omission in your tax return or tax assessment, and the resulting difference in the calculated Payable Tax is more than AED 10,000 for a particular period, you will have to submit a Voluntary Disclosure. You can do this by submitting Form 211, which you can find online on the FTA’s portal.

For example, let’s suppose that you have already submitted a VAT return (Form 201) disclosing a VAT liability of AED 100,000 for the VAT period of January 1st to March 31st. Later, you realise you should have disclosed a total of AED 120,000. The difference is AED 20,000, which is more than the AED 10,000 threshold. In this situation, you will have to submit a Voluntary Disclosure for that particular VAT return.

What if the difference in the tax amount is less than AED 10,000?

You do not have to submit a Voluntary Disclosure (Form 211) if the variation in tax amount is less than AED 10,000. In the previous example, suppose the amount you should have disclosed is AED 105,000, but you have only disclosed AED 100,000. The difference is AED 5,000, which is less than the AED 10,000 threshold. You can choose to disclose this difference in the subsequent VAT return period (in this case, April 1st to June 31st).

How do I submit a Voluntary Disclosure for a VAT return?

To submit a Voluntary Disclosure for a VAT return, go to the VAT201 - VAT Returns tab and click the Submit Voluntary Disclosure button that is on the same row as the VAT return you wish to rectify.
To submit a Voluntary Disclosure for a tax assessment sent to you, go to the VAT 211 - Voluntary Disclosure/Tax Assessment tab and click the Submit Voluntary Disclosure button that is on the same row as the tax assessment you wish to rectify.

You will not be able to click the Submit Voluntary Disclosure button if you have already submitted a Voluntary Disclosure for that VAT return or tax assessment.

What information do I need to provide when submitting a Voluntary Disclosure for VAT returns?

Your personal details such as your name, phone number, address, and the VAT return period for which you are filing a Voluntary Disclosure will already be filled in their corresponding boxes. You will need to provide the date on which you identified the error and a valid reason for submitting a Voluntary Disclosure, in the form of a letter containing a detailed description of the error.

The original disclosed VAT return amount will be shown under “as reported.” You will be able to edit the amount shown under “as current,” which will be pre-populated with the reported amount.

How do I submit a Voluntary Disclosure for excise tax?

To submit a Voluntary Disclosure for an excise tax return, go to the EX204 - Excise Tax Returns tab in the Excise Tax section and click the Submit Voluntary Disclosure button that is on the same row as the excise tax return you wish to rectify.
To submit a Voluntary Disclosure for an excise tax assessment sent to you, go to the EX214 - Voluntary Disclosure/Tax Assessment tab and click the Submit Voluntary Disclosure button that is on the same row as the tax assessment you wish to rectify.

You will not be able to click the Submit Voluntary Disclosure button if you have already submitted a Voluntary Disclosure for that VAT return or tax assessment.

What information do I need to provide when submitting a Voluntary Disclosure for excise tax returns?

Your personal details such as your name, phone number, address, and the excise tax return period for which you are filing a Voluntary Disclosure will already be filled in their corresponding boxes.

Provide the date on which you identified the error.
If you find an error in the amount you disclosed on your previous excise tax return, navigate to Type and select the declaration’s type and reference number.
Provide more details of the error under Description.
If the error you are disclosing leads to a higher amount of excise payable tax you owe to the FTA, select Payable. If the error leads to an excess amount of refundable tax to you, select Refundable.
Indicate the amount of the error.
Provide a valid reason for submitting a Voluntary Disclosure, in the form of a letter containing a detailed description of the error.
In the form, you can find the original disclosed excise tax return amount under “as reported.” You will be able to edit the amount labelled “as current,” which will be pre-populated with the reported amount.

Is there any penalty for submitting a Voluntary Disclosure for VAT returns?

You will have to pay administrative penalties when submitting a Voluntary Disclosure, or Form 211, like you do for filing late tax returns. These penalties vary depending on your specific case.

There are two types of penalties when you submit a Voluntary Disclosure:

Fixed Penalty: The first time you file a Voluntary Disclosure, or Form 211, without any notification from the FTA, you will have to pay a fixed penalty of AED 3,000. From then on, every subsequent submission of Form 211 will require you to pay a penalty of AED 5,000.
Percentage-Based Penalty: This penalty is based on the amount that was not orignally reported. For example, if you disclosed a tax liability of AED 100,000, but later realise you should have disclosed a tax liability of AED 150,000, then the percentage-based penalty will be levied on the difference in these amounts: AED 50,000.

Is there any penalty for submitting a Voluntary Disclosure for excise tax returns?

Just as there are penalties for Voluntary Disclosures for VAT returns, you may also have to pay penalties for Voluntary Disclosures for excise tax returns.

These penalties vary depending on your specific case.