FTA VAT Voluntary Disclosure in UAE
VAT has now become a necessary part of doing business in the UAE. VAT voluntary disclosure in the UAE, as well as VAT payment to the FTA (Federal Tax Authority) in the UAE, must be performed with extreme precision and accuracy. Then you must learn how to correct any mistakes that might have occurred during VAT voluntary disclosure.
First and foremost, what exactly is Voluntary Disclosure?
It’s just a form issued by the Internal Revenue Service. It enables business people and taxpayers to inform the FTA of any errors or adjustments that need to be made in a Dubai tax return or refund.
In the UAE, when does a taxpayer have to use VAT voluntary disclosure?
In the event that a taxpayer makes a mistake or omission in a Tax Return, Tax Assessment, or Tax Refund filing, a disclosure may be completed. This form “”VAT211”” enables taxpayers to correct errors. Depending on the circumstances, a taxable individual should or can inform the FTA of a mistake or omission in an excise tax return, tax assessment, or refund application by making a voluntary disclosure.
What are the basic requirements for filling out a VAT voluntary disclosure form in the United Arab Emirates?
- If a taxpayer discovers that a tax return he filed with the FTA or a tax assessment he received from the FTA is inaccurate, resulting in an estimate of the payable tax that is less than it should be by more than 10,000 AED, he must file a voluntary disclosure to correct the mistake.
- If a taxpayer discovers that a tax refund application he submitted to the FTA was wrong, resulting in the refund sum to which he is entitled being calculated higher than it should have been, he must make a voluntary report to correct the mistake.
- If a taxpayer discovers that a tax refund application he submitted to the FTA is inaccurate, resulting in the refund sum to which he is entitled being calculated less than it should be, he may file a voluntary disclosure to correct the mistake.
Now that we know what VAT voluntary disclosure in the UAE entails, we must also be mindful of other information such as the documentation that must be submitted in conjunction with the voluntary disclosure to justify it. Obviously, all documents supporting and explaining the specifics of the mistakes, as well as a letter containing the facts and the justification for the need to submit voluntary disclosure, must be attached and uploaded.
Are there any consequences for making a voluntary disclosure? Yes, there are two forms of penalties for submitting Voluntary Disclosure: a fixed penalty of AED 3,000 for the first time, and a penalty of AED 5,000 or more for the second or repeated submission.
Aside from that, there’s plenty to learn about how much FTA penalises, which is calculated as a percentage. The following are the specifics:
- If a Voluntary Disclosure is filed before the authority notifies the taxable individual and before the tax audit, a liability of 5% of the tax sum not reported earlier will be paid.
- If a Voluntary Disclosure is filed after the authority has notified you of a tax audit, but before the audit begins, you will be assessed a penalty of 30% of the unpaid tax sum.
- If the Voluntary Disclosure is filed after an audit, a liability of 50% of the unpaid tax sum is imposed.
These are some of the most important aspects of VAT voluntary disclosure in the UAE. So, if you need to file a Voluntary Disclosure because you made a mistake on your tax return, these specifics will certainly help you do it correctly and accurately. If you still have questions, seek advice from experts such as a reputable VAT Consultant in Dubai who can assist you in filling them out.