Sooner or later, most VAT-registered businesses discover that a return they filed was not quite right. Usually it is nothing dramatic: a supplier invoice claimed twice, a sale recorded as zero-rated when it should have carried 5%, or a reverse charge on an imported service that never made it into the return.
What matters is what you do next. The UAE system gives you a way to correct past errors yourself, and using it properly can make a real difference to the outcome.
Two ways to correct an error
The route depends mainly on the size of the error.
- Smaller errors. Where the error changes the tax due by AED 10,000 or less, it can generally be corrected in the VAT return for the period in which you discover it.
- Larger errors. Where the difference is more than AED 10,000, you need to submit a voluntary disclosure to the Federal Tax Authority through the EmaraTax portal, setting out the corrected figures for the affected period.
If the error means you have underpaid tax, the voluntary disclosure must be made within 20 business days of becoming aware of it. That clock starts when you find the problem, not when you finish investigating it, so it is worth starting the review promptly.
Why disclosing first is better
Penalties still apply when you correct an error through a voluntary disclosure. However, they are generally lower than the penalties that apply when the FTA identifies the same error itself, for example during a tax audit. Once the FTA has notified you of an audit, the options for correcting errors on your own initiative narrow.
There is also a practical benefit. A business that finds and corrects its own errors shows the FTA that its controls are working, which helps if questions arise later.
Common sources of errors
In our experience, these are some of the areas most worth checking:
- Zero-rated exports and services without the evidence the law requires to support zero-rating.
- Reverse charge on services and goods imported from outside the UAE.
- Blocked input tax, such as VAT on certain entertainment costs or on vehicles available for personal use, claimed as if it were recoverable.
- Tax invoices missing required details, which can put the related input tax claim at risk.
- Credit notes recorded in the wrong period, or without adjusting the VAT.
What to do if you find an error
Start by confirming the scale of the problem. One error often points to a process issue that has repeated across several periods, so check whether the same treatment was applied elsewhere before deciding on the route.
Then calculate the corrected figures for each affected period, decide whether each one can go through a return or needs a voluntary disclosure, and fix the underlying process so the error does not recur.
If you are unsure whether something is an error at all, or which route applies, it is worth getting advice before you file anything. A short review now is usually far cheaper than dealing with the consequences later.
This article is general information based on the rules as we understand them at the date of publication. It is not advice on your circumstances. Laws and practice change, so please speak to us before acting on it.
