VAT Voluntary Disclosure Services in the UAE
Correct VAT return errors the right way
You may find a mistake in a VAT return you have already filed: output tax left out, input tax claimed when it should not have been, or a refund claim that was too high. The Tax Procedures Law expects you to correct it through a voluntary disclosure to the Federal Tax Authority. If the tax shortfall is more than AED 10,000, you have 20 business days from the day you became aware of the error.
DirhamWise investigates the error with you and calculates the tax difference for each affected period. We prepare the explanatory letter and supporting schedules, then complete the disclosure on EmaraTax. You get a penalty estimate before anything is submitted, so you know the likely cost in advance.
What's included
When a voluntary disclosure is required, and when it is optional
A voluntary disclosure is the FTA form you use to report an error or omission in a tax return, a tax assessment or a tax refund application. Article 10 of Federal Decree-Law No. 28 of 2022 on Tax Procedures says when you must file one and when you may choose to.
| What you discover | Effect | Voluntary disclosure |
|---|---|---|
| A filed return, or an FTA tax assessment, understates the tax payable | You owe the FTA more tax | Mandatory |
| A refund application claimed more than you were entitled to | You have claimed too much back | Mandatory |
| A filed return, or an FTA tax assessment, overstates the tax payable | You have paid too much | Optional |
| A refund application claimed less than you were entitled to | You are owed more | Optional |
| An error or omission that does not change the tax due | Reporting only | Required where the FTA specifies it; otherwise corrected in a later return |
A disclosure cannot be submitted more than five years after the end of the tax period concerned. The one exception is a disclosure correcting an overstated refund application on which the FTA has not yet made a decision. If the error left you with overpaid VAT or a credit balance, the time limits for claiming it back are explained on our VAT refund page.
The same Article 10 rules also cover corporate tax and excise tax. This page deals with VAT. For errors in a corporate tax return, see our corporate tax services.
The AED 10,000 threshold and the 20-business-day deadline
Not every underpayment needs a disclosure. The Executive Regulation of the Tax Procedures Law (Cabinet Decision No. 74 of 2023, amended from 1 April 2026) sorts errors by the size of the tax difference.
| Tax difference | What you do | Deadline |
|---|---|---|
| More than AED 10,000 | Submit a voluntary disclosure | Within 20 business days of becoming aware of the error |
| AED 10,000 or less | Correct it in the earliest VAT return that is not yet due | By that return’s due date, which is 28 days after the end of its tax period |
| AED 10,000 or less, with no return available to correct it (for example, after deregistration) | Submit a voluntary disclosure | Within 20 business days of becoming aware of the error |
The threshold is measured on the tax, not on the value of the transaction. At the 5% rate, leaving out a AED 150,000 sale creates a VAT difference of AED 7,500, which can be corrected in the next return. Leaving out a AED 250,000 sale creates a difference of AED 12,500, which needs a disclosure.
The 20 business days start when you become aware of the error, not when you finish investigating it. Errors often surface during a month-end close, an external audit, a move to new accounting software, or a buyer’s due diligence. Once that happens, the calculation needs to start at once.
Each disclosure is filed against one specific VAT return, so an error that runs across several quarters is corrected period by period.
Penalties: disclosing now versus waiting for an audit
Since 14 April 2026, VAT penalties have been set by Cabinet Decision No. 40 of 2017, as amended by Cabinet Decision No. 129 of 2025. The penalty is much lower if you report the error yourself than if the FTA finds it.
| Situation | Penalty |
|---|---|
| Disclosure submitted before any FTA audit notice | 1% of the tax difference for each month or part of a month. It runs from the day after the original return was due (or, for a refund application, the day after it was submitted) until the day the disclosure is submitted. |
| Disclosure submitted after the FTA gives notice of a tax audit | A fixed 15% of the tax difference, plus 1% a month from the day after the return was due until the disclosure is submitted |
| No disclosure; the error is found by the FTA | A fixed 15%, plus 1% a month until the FTA issues its tax assessment |
| Incorrect return | AED 500. This does not apply if the return is corrected before its filing deadline, or if the disclosure shows no difference in tax. |
| Late payment of the disclosed tax | The tax is due 20 business days after the disclosure is submitted. After that, 14% a year is charged monthly on the unpaid amount. |
The FTA must give at least 10 business days’ notice before a tax audit. Once you receive that notice, the fixed 15% applies even if you then disclose. The chance to disclose at the lower rate therefore ends the day the notice arrives. Our guide to preparing for a VAT audit explains what follows the notice.
Worked example
A company filed its VAT return for the quarter ending 31 March 2026, due on 28 April 2026. In September 2026 its accountant finds that AED 40,000 of output VAT on a service contract was left out. If the company submits a disclosure on 20 September 2026, the delay counts as five months or part-months after the due date. The penalty is 5% of AED 40,000, which is AED 2,000, on top of the AED 40,000 of tax. If the error came to light only after an audit notice, the fixed 15% alone would be AED 6,000, before the monthly element is added.
This example is for illustration only. The FTA calculates the final penalty, and errors in periods before 14 April 2026 should be checked individually against the rules in force at the time. If you believe a penalty has been applied incorrectly, you can ask the FTA to reconsider it within 40 business days of being notified. See our page on VAT penalty reconsideration.
VAT errors that commonly lead to a disclosure
Most disclosures come from a small number of recurring problems. We check for all of them before we file, because a second error found in the same period later means going back to the FTA again.
- Missed output tax: invoices raised late, deposits and advance payments not taxed, or sales booked in the wrong period.
- Reverse charge: VAT on imported services or goods left out, or declared on only one side of the return.
- Input tax claims: claims made without a valid tax invoice, on blocked costs such as entertainment, or on costs linked to exempt supplies.
- Zero-rating: exports treated as zero-rated without the export evidence the law requires.
- Emirate allocation: standard-rated sales reported under the wrong emirate in Box 1.
- Imports: import VAT figures that do not match customs records and needed an adjustment in Box 7.
- Credit notes and bad debts: credit notes not reflected, or bad-debt relief claimed without meeting the conditions.
- System changes: VAT control accounts that stopped reconciling after a change of accounting software.
Amendments to the VAT Executive Regulation (Cabinet Decision No. 149 of 2026) take effect from 1 October 2026. They change the input tax rules for staff accommodation and for purchases paid in cash, and how composite supplies are taxed, so returns from that date deserve a closer review. For routine return preparation, see our VAT services.
How a VAT voluntary disclosure is filed on EmaraTax
VAT disclosures are made on the FTA’s EmaraTax portal. Each disclosure is linked to the VAT return it corrects. The steps are:
- Confirm the error. Trace the transactions, recalculate the VAT for each affected period and correct the accounting records.
- Choose the route. Apply the AED 10,000 test to decide between a disclosure and a correction in the next return.
- Open the return. Log in to EmaraTax, choose the taxable person, open the VAT module and go to My Filings. Select the return you are correcting and start the voluntary disclosure.
- Accept the guidelines. Confirm that you have read the FTA’s instructions for the form.
- Enter the corrected figures. Enter the correct amount in each affected box. The portal shows the figures you declared before next to the new ones. You can also use the FTA’s offline template for longer corrections.
- Upload the evidence. Attach the explanatory letter and supporting documents.
- Review, declare and submit. Note the transaction number and download the submission acknowledgement.
- Pay the tax difference within 20 business days of submitting, to avoid the late-payment penalty.
- Respond to the FTA. If the tax officer asks for more information, the disclosure comes back to you for editing, and you can add notes for the officer. Its status then shows whether the FTA has acknowledged or rejected it.
For a VAT group, the representative member submits the disclosure for the group.
Supporting documents the FTA expects
The FTA asks for a letter with each disclosure. The letter sets out the background facts, describes each correction, and shows its effect on the boxes of the return. A clear file makes it less likely that the FTA will come back with questions. For a typical VAT disclosure we prepare:
- the explanatory letter, written in plain terms and cross-referenced to each schedule
- a reconciliation for each return box, showing the original figure, the corrected figure and the difference
- a calculation of the tax difference for each affected period
- copies of the relevant tax invoices and credit notes
- customs declarations for import corrections
- general ledger extracts and the VAT control account
- contracts or purchase orders where place of supply or zero-rating is in question
- export evidence for any zero-rated sales being corrected
If the FTA asks for documents in Arabic, you must provide them. Failing to do so carries a penalty of AED 5,000. A disclosure submitted in the fifth year after a tax period ends gives the FTA one more year from the submission date to audit that period. It also extends how long you must keep the related records by one year. Good bookkeeping is what makes these documents quick to produce.
What DirhamWise does on a voluntary disclosure
We handle each disclosure as a short, fixed-scope project. It starts on the day you tell us about the error, because the 20-business-day deadline is already running.
- Day one scoping: we look at what you have found and which periods it affects, and whether an audit notice has already been received.
- Quantification: we recalculate the VAT from the source records and look for other errors in the same periods, so that, where possible, all corrections for a period go into one disclosure.
- Route and cost: we confirm whether a disclosure is needed and estimate the penalty and the total amount you will pay.
- Disclosure pack: the explanatory letter, box reconciliations and evidence, ready for review by your management.
- Submission and payment: we complete the form on EmaraTax with you and give you the payment reference and due date.
- Aftercare: we answer FTA follow-up questions, post the correcting entries and change the process that caused the error.
You receive a fixed-fee quote once we understand the scope. For businesses that want the returns handled every quarter, our monthly accounting packages include VAT return preparation. Our VAT registration and VAT deregistration pages cover the other VAT procedures.
Frequently asked questions
What is a voluntary disclosure in VAT?
It is the FTA form a business uses to correct an error or omission in a VAT return, a tax assessment or a refund application it has already submitted. It is filed on EmaraTax against the specific return being corrected, with corrected figures, an explanatory letter and supporting documents.
Do I need a voluntary disclosure if the error is under AED 10,000?
Usually not. If the tax difference is AED 10,000 or less, you correct it in the earliest VAT return that is not yet due. You file a disclosure only if there is no return through which you can correct it, for example after deregistration. For anything above AED 10,000, a disclosure is required within 20 business days of becoming aware of the error.
Can I still submit a voluntary disclosure after the FTA notifies me of an audit?
Yes, but it costs more. A disclosure made after an audit notice carries a fixed penalty of 15% of the tax difference, plus 1% a month from the day after the original return was due. Before the notice, only the 1% monthly element applies. The FTA must give at least 10 business days’ notice of an audit.
How long do I have to pay the tax after submitting a voluntary disclosure?
The tax is due 20 business days after the disclosure is submitted. If it is not paid by then, a late-payment penalty of 14% a year, charged monthly, applies to the unpaid amount.
Can I use a voluntary disclosure to reclaim VAT I overpaid?
Yes. If a return overstated the tax you owed, you may file a disclosure to correct it, although you are not required to. Refund and credit-balance claims are subject to time limits, which are covered on our VAT refund page.
Is there a time limit for correcting old VAT returns?
Yes. A voluntary disclosure cannot be submitted more than five years after the end of the tax period concerned. The exception is a disclosure correcting an overstated refund application on which the FTA has not yet made a decision.
Does a voluntary disclosure apply to corporate tax as well?
Yes. The same Tax Procedures Law rules cover corporate tax returns, and the penalty is 1% of the tax difference per month where the error is disclosed before an audit notice. See our corporate tax services for help with corporate tax corrections.
What happens after the FTA receives the disclosure?
A tax officer reviews it. If more information is needed, the disclosure is returned to you on EmaraTax to add documents or notes and resubmit. Its status then shows whether it has been acknowledged or rejected. If you disagree with a penalty that follows, you can request reconsideration within 40 business days of being notified.
Found an error in a filed VAT return?
Send us the return concerned and a short note on what went wrong. We will confirm whether a disclosure is needed, estimate the penalty and give you a fixed-fee quote.
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