Update on Voluntary Disclosure of VAT Errors
Starting from March 1, 2023, any VAT return errors must be voluntarily disclosed to the Federal Tax Authority (FTA). Previously, only errors that exceed AED 10,000 (or around USD 3,750) were subject to voluntary disclosure. Now that the threshold has been removed, it is necessary to disclose even the smallest errors.
Fixed fines of AED 1,000 for the initial disclosure and AED 2,000 for subsequent disclosures have been introduced for such errors. Penalties for late payments may also be applied. As a result, due to the threshold for voluntary disclosures being eliminated, the penalty for small errors can sometimes be far higher than the actual tax liability.
