- January 6, 2025
- Posted by: admin
- Category: Blog
In the vibrant landscape of taxation in the UAE, businesses usually struggle with the intricacies of value-added tax (VAT). Without a comprehensive understanding, companies in the UAE might identify errors and omissions after filing the returns. Here is when Voluntary Disclosure comes into the picture. Voluntary Disclosure in VAT is the ultimate source of transparency and honesty among the manifold compliance regulations. For taxpayers, this particular form is significant as it allows them to rectify their mistakes within a specific time after the VAT return. This blog sheds light on the importance, circumstances that generate its use, and the advantages it provides to businesses during their taxation procedures.
What is a Voluntary Disclosure?
A Voluntary Disclosure is a legal requirement that permits taxpayers to register any mistakes or omissions caused in their filed Tax Return, Tax Assessment, or Tax Refund application. The Federal Tax Authority (FTA) in UAE is responsible for issuing this provision in order to motivate taxpayers to be transparent and report any discrepancies in their tax statements before the FTA comes to know about them. However, by fulfilling this requirement, taxpayers and prevent any fines or legal actions that FTA might impose if they detect non-adherence of UAE business tax compliance during an audit.
Circumstances for Submitting a Voluntary Disclosure
The need for the Voluntary Disclosure VAT UAE form occurs in the specific circumstances given below:
1. Underpayment of VAT: If the previous VAT return or an evaluation from FTA depicts that the amount paid for the VAT return is lower than the actual amount, then the company must submit a voluntary disclosure to correct the underpayment.
2. Overpayment of VAT: A business may file a Voluntary Disclosure to recover the excess amount paid if they discover that a previously filed VAT return or tax assessment indicates a VAT amount greater than what was due.
3. Overstated Refund Claim: A taxpayer must file a Voluntary Disclosure to fix an excess refund if they find a mistake in a VAT refund application that led to an overstatement of the refund amount.
4. Understated Refund Claim: A Voluntary Disclosure in VAT may be made to obtain the full refund amount if a mistake in a VAT refund application results in a smaller refund than what was due to the taxpayer.
5. Errors Without VAT Amount Impact: If a VAT return has an error or omission that does not impact the amount of tax due, the taxpayer is required to submit a Voluntary Disclosure to fix the error.
It will be subject to lower fines if the errors or non-compliance are found and corrected right away, as compared to if the FTA finds the errors or non-compliance during the audit. For accurate filling and assessment, businesses can opt for VAT Consultancy UAE from professionals.
What are the procedures for making a voluntary VAT disclosure?
If applicable, Voluntary Disclosure VAT UAE must be done via the FTA portal. Using their login credentials, registered users can access the FTA portal and select the “VAT 211-VAT voluntary disclosure/tax assessment” tab. The user can choose the return for which the voluntary disclosure is required from a list of previously filed returns. After choosing, the user can change the return amounts with the accurate numbers. Supporting documentation must be provided in addition to the voluntary disclosure in order to provide context and justification for the VAT return correction.
What are the Penalties on Submission of VAT Voluntary Disclosure?
VAT disclosure UAE businesses may be subject to two types of penalties:
- Fixed Penalty: AED 3,000 is the fixed penalty for submitting a Voluntary Disclosure (Form 211) for the first time without first receiving notice from the FTA. Any further Form 211 submissions will result in a fixed penalty of AED 5,000.
- Percentage-Based Penalty: Based on the difference in the first reported amount, this penalty is calculated. AED 50,000 is the percentage-based penalty that will be applied if, for example, you initially revealed a tax burden of AED 100,000 but later realized it should have been AED 150,000.
How VAT Consulting Services UAE Can Help with VAT Voluntary Disclosure?
As the Voluntary Disclosure process has certain rules that govern eligibility and procedures, navigating it can be challenging. A reliable VAT consultancy service in the UAE can offer comprehensive assistance to guarantee that your disclosures are honest and in compliance with the law. With a complete understanding of the market for value-added tax services in the United Arab Emirates, a trusted VAT consultancy UAE team of tax experts can help you with the VAT voluntary disclosure process.
Services they Offer:
- Detailed Error Analysis: Any discrepancies in your VAT returns, assessments, or refund requests are found and examined by the VAT experts.
- Accurate Documentation and Filing: The team of VAT consultants makes sure that every aspect complies with FTA regulations by preparing and submitting the required paperwork for the Voluntary Disclosure, including the letter that must be sent to the FTA outlining the reasons.
- Penalty Mitigation Guidance: Through Reconsideration requests, they assist you in understanding possible administrative penalties and how to reduce them after the Voluntary Disclosure process.
Conclusion
Voluntary Disclosure in VAT is one of the key indicators of a business’s adherence and transparency to the UAE taxation authorities. As they file returns themselves, it would be wise to get assistance from a leading VAT consultancy expert.
At Taskmaster Gulf, we are a team of highly experienced and skilled professionals who specialize in delivering Voluntary disclosure solutions in the UAE. With a profound understanding of the domestic regulatory landscape and a dedication to delivering outstanding client service, we guarantee to navigate you through tax intricacies in the UAE.
Also read: Tax Avoidance vs. Tax Evasion: A Deep Dive into UAE’s Corporate Tax Environment
