Discovered a mistake in a past VAT return? The UAE voluntary disclosure mechanism lets you correct it proactively — at a 5% penalty rate instead of the 50–300% the FTA charges when they find the error themselves. Essence Accounting handles the entire process: identifying errors, calculating correct liability, and submitting a watertight disclosure via EmaraTax.
Under the UAE Federal Tax Procedures Law and FTA Decision No. 6 of 2020, a voluntary disclosure (VD) is the formal mechanism for correcting errors or omissions in a previously filed tax return. Whether you under-declared output VAT, over-claimed input VAT, applied the wrong rate, or omitted transactions entirely, you are legally required to correct the error — and doing so proactively via VD attracts far lower penalties than waiting for the FTA to discover it.
The penalty for a voluntary disclosure is 5% of the unpaid or over-reclaimed tax per month from the date of the original error (minimum AED 3,000). Compare this to penalties of 50% on first discovery and 300% on repeated underpayments when the FTA finds the error during an audit. For any material error, filing a voluntary disclosure is the financially prudent — and legally required — course of action.
The key rule: you must file the VD within 20 business days of becoming aware of the error, and — critically — before the FTA formally notifies you of an audit. Once an audit starts, the VD window closes. Essence Accounting helps businesses identify errors they may not even realise exist and file clean, complete disclosures that the FTA accepts without further inquiry.
Any business that has made an error in a past VAT return should consider voluntary disclosure. These are the most common situations we encounter.
If you charged VAT to customers but reported a lower figure on your VAT return — due to data entry errors, misclassification of supplies, or accounting system issues — you have an under-declaration that must be corrected. The longer you wait, the higher the accumulated monthly penalty on the shortfall.
Claiming input VAT on non-qualifying expenses (entertainment, personal expenses, blocked items), duplicate invoice entries, or invoices that do not meet FTA requirements all constitute over-claiming. If discovered during an FTA audit without prior disclosure, penalties are severe. We help businesses identify and correct over-claims before they become audit findings.
Omitting invoices from a VAT return — whether due to late billing, accounting system errors, or oversight — is a common error. If the omitted transactions carried output VAT, you have an under-declaration. If they carried input VAT, you have a legitimate missed claim that can be recovered through voluntary disclosure.
Applying 5% VAT to zero-rated supplies, or treating standard-rated services as exempt, are rate misclassification errors that require voluntary disclosure. This is particularly common in mixed-supply situations, real estate transactions, and businesses operating across multiple emirates with different supply types.
Reporting a supply or purchase in the wrong VAT period — even if the total tax is correct — is a technical error under UAE VAT law. Time-of-supply rules under the UAE VAT Executive Regulation are precise and businesses frequently get the period wrong on advance payments, continuous supplies, and import transactions.
The corporate tax filing process requires reconciliation of VAT turnover with CT revenue figures. Many businesses discover discrepancies between their VAT returns and financial statements during CT preparation — these discrepancies often reveal VAT errors that require voluntary disclosure before the FTA cross-checks the two returns.
Time is critical with voluntary disclosures. Once you suspect an error exists, act immediately — the 20-business-day clock starts from the date you became aware. We move fast.
Start TodayWe review your VAT returns, accounting records, and tax invoices to identify all errors — not just the ones you have spotted. A complete review ensures the disclosure is comprehensive and avoids partial disclosure which can attract FTA suspicion.
We calculate the exact VAT under/over payment and the applicable penalty (5% per month from the date of the error). We also calculate the correct figures for all affected return periods so the disclosure is precise.
We prepare the corrected VAT computation, supporting documentation, and a covering submission letter explaining the nature of the error. Thorough documentation reduces the risk of FTA follow-up queries.
As your FTA-registered tax agent, we submit the voluntary disclosure application via EmaraTax. We ensure every field is correctly completed and all supporting documents are attached.
We confirm the FTA's acceptance of the disclosure and advise on the exact payment required (corrected tax + minimum penalty). Payment through EmaraTax closes the matter. We update your records and advise on controls to prevent recurrence.
As registered FTA tax agents (TAN 30006266), we can submit the voluntary disclosure and communicate with the FTA directly on your behalf. You do not need to deal with the FTA personally — we handle all correspondence.
Before filing, we review all VAT returns for the period in question to catch every error — not just the one you found. A comprehensive disclosure protects you from residual FTA audit risk better than a partial one.
We calculate exactly what you owe — no more, no less. Many businesses overpay penalties by miscalculating the monthly compounding or misidentifying the error date. We ensure you pay the minimum legally required amount.
Voluntary disclosures have a 20-business-day deadline from the date of error discovery. We prioritise VD mandates and can typically prepare and submit within 48–72 hours of receiving your records.
A well-prepared voluntary disclosure significantly reduces the risk of the FTA treating the error as grounds for a full audit. Our submissions are structured to address likely FTA concerns proactively, closing the matter cleanly.
After every voluntary disclosure engagement, we provide a brief compliance improvement report identifying the root cause and recommending process changes to prevent the same error recurring in future returns.
Every day you wait increases the penalty. Essence Accounting can prepare and file your voluntary disclosure quickly and accurately — minimising your penalty exposure and protecting you from FTA audit risk. Free consultation, no obligation.
Essence Accounting and Bookkeeping Co. L.L.C — FTA Approved Tax Agency, TAN 30006266 — Business Bay, Dubai
