A voluntary disclosure is a process through which a taxpayer informs the FTA about an error or omission in a VAT return, assessment, or refund application. If the identified error or omission leads to an underpayment of taxable tax by more than AED 10,000, a Voluntary Disclosure must be submitted within 20 business days from the date the taxable person becomes aware of the error.
A voluntary disclosure can arise from various circumstances, such as an independent health check conducted by the tax registrant, reviews of specific transaction scenarios, assessments of past filed returns, or modifications based on instructions provided by the FTA during the review of a refund application.
As per Article 8 of Cabinet Decision No. 36 of 2017 on the Executive Regulation of Federal Law No. (7) of 2017 on Tax Procedures, voluntary disclosures are required under the following circumstances:
When a tax return or tax assessment is incorrectly completed, resulting in the calculation of payable tax being less than the actual amount required. This applies if the underpayment of tax exceeds AED 10,000.
In cases where the computation of payable tax is inaccurate, leading to an underpayment of tax not exceeding AED 10,000, and there is no available Tax Return to correct the error.
If a tax refund request is submitted incorrectly, causing the taxpayer to receive a refund greater than the correct amount, except when the mistake is attributed to a false tax return or an inaccurate tax assessment.