What Is a UAE VAT Voluntary Disclosure and When Should One Be Made?

What a Voluntary Disclosure Is

A voluntary disclosure is a formal notification made by a taxable person to the Federal Tax Authority (FTA), through the EmaraTax portal, acknowledging that a previously filed VAT return or Corporate Tax return contains an error or omission and providing the corrected information. The key word is “voluntary” , the taxable person identifies and discloses the issue before the FTA identifies it through audit, data matching, or investigation.

Voluntary disclosure is the legally recognised mechanism in the UAE for correcting tax errors. It is governed by the UAE Tax Procedures Law under Federal Decree-Law No. 28 of 2021 and the associated Cabinet Decisions. Making a voluntary disclosure before the FTA opens an audit or notifies the business of an investigation results in significantly lower penalties than those applied where the FTA identifies the error itself.

When a VAT Voluntary Disclosure Is Required

Not every VAT error requires a formal voluntary disclosure. The threshold matters. Where the net error in a VAT return is AED 10,000 or less, the business may correct the error in the next VAT return rather than filing a separate voluntary disclosure form. Where the error exceeds AED 10,000, a formal voluntary disclosure must be submitted through EmaraTax.

A VAT voluntary disclosure is required in the following situations:

• Output VAT was understated in a previous return, meaning the business collected less VAT than it should have or failed to account for a taxable supply
• Input VAT was overstated in a previous return, meaning the business recovered more VAT than it was entitled to
• A return was filed with incorrect figures, including wrong classification of supplies (e.g. treating a standard-rated supply as zero-rated) where the net understatement exceeds AED 10,000
• A VAT return was not filed for a period and the tax period is now closed
• An error was made in a previous return that has already been the subject of a prior voluntary disclosure and needs further correction

A voluntary disclosure should also be considered where the business has identified that it failed to register for VAT at the correct time and has been making taxable supplies without charging or accounting for VAT.

The Penalty Structure for VAT Voluntary Disclosures

Under the UAE tax penalty framework restructured by Cabinet Decision No. 129 of 2025, the penalty for a voluntary disclosure combines a fixed administrative penalty with a percentage-based penalty on the understated or overstated tax amount.

The voluntary disclosure penalty structure under the current framework is:

Late payment interest at 14% per annum also accrues on any unpaid tax from the date the tax was originally due. The percentage-based penalty and late payment interest apply in addition to the fixed administrative penalty for the voluntary disclosure filing itself.

Where the FTA identifies the error before the voluntary disclosure is submitted, the percentage penalties are significantly higher , ranging up to 50% of the understated tax , and the business loses the benefit of the voluntary disclosure penalty reduction entirely. Filing promptly when an error is identified is therefore materially important.

When a Voluntary Disclosure Is NOT Effective

A voluntary disclosure does not qualify for the reduced penalty treatment in the following circumstances:

• An FTA audit has already been notified: once the FTA informs a business that it is subject to a tax audit covering the period in question, the penalty reduction available through voluntary disclosure no longer applies to that period
• The FTA has already identified the error: where the FTA has raised a tax assessment or enquiry about the specific issue, the voluntary disclosure process cannot be used to secure the reduced penalty on that particular matter
• Deliberate tax evasion: where the FTA determines that the error was not a genuine mistake but a deliberate omission or misrepresentation, the voluntary disclosure does not prevent criminal investigation and prosecution under the applicable penal provisions

The appropriate time to file a voluntary disclosure is as soon as an error is identified, not after waiting to see whether the FTA will find it first.

How to Submit a VAT Voluntary Disclosure Through EmaraTax

All VAT voluntary disclosures are submitted through the FTA’s EmaraTax portal at eservices.tax.gov.ae. The process involves:

1. Log in to EmaraTax and navigate to the VAT section of the taxable person’s profile
2. Select the voluntary disclosure option and identify the specific return period to be corrected
3. Enter the corrected figures for each box that was originally filed incorrectly and provide a clear explanation of the nature of the error, when it occurred, and why it was not identified earlier
4. Attach supporting documentation: corrected invoices, contracts, calculations, or any other evidence supporting the corrected position
5. Review the calculated tax difference, applicable percentage penalty, and late payment interest before submission
6. Submit the disclosure and pay the additional tax due, along with any assessed penalties and interest, through the EmaraTax payment gateway

The FTA reviews submitted voluntary disclosures and may request additional information or supporting evidence before confirming acceptance. The disclosure is formally accepted once the FTA issues a confirmation notice through EmaraTax.

Corporate Tax Voluntary Disclosures

The voluntary disclosure mechanism applies to Corporate Tax as well as VAT. Where a business identifies an error in a filed Corporate Tax return, it should correct that error through a voluntary disclosure on EmaraTax rather than waiting for the FTA to identify it. The same principle applies: the penalty for a voluntary disclosure is significantly lower than the penalty for an FTA-identified error, and late payment interest at 14% per annum accrues from the original Corporate Tax due date regardless of when the disclosure is made.

Where a business has incorrectly claimed Small Business Relief, incorrectly classified income as qualifying for the QFZP 0% rate, or made transfer pricing adjustments that were not at arm’s length, a voluntary disclosure to correct the Corporate Tax return is the appropriate mechanism to regularise the position before it is identified by the FTA in an audit.

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co. assists UAE businesses with the preparation and submission of VAT and Corporate Tax voluntary disclosures through EmaraTax, including identification of the errors to be disclosed, calculation of the tax difference and applicable penalties, preparation of supporting documentation, and FTA correspondence throughout the review process. As an FTA-registered Tax Agent, our team can submit voluntary disclosures directly on behalf of clients.

Contact Farahat & Co. today to discuss your VAT or Corporate Tax voluntary disclosure requirements.