How Voluntary VAT Disclosure Helps Companies in Tax Filings?
Errors or omissions in a submitted VAT return is possible and they can be identified in a later stage which arises concerns for any available chances of their rectification then. FTA has allowed an option of voluntary VAT disclosure for tax payers to amend the amounts of a previously filed return. Though it is highly recommended to apply due care while preparing and filing VAT returns, tax payers should be aware of the error rectification process, in case if required based on subsequent review of a return that is already submitted with FTA.
What is meant by voluntary VAT disclosure?
A voluntary VAT disclosure is facility via a form (Form 211) made available by FTA for VAT registered parties to notify FTA about any error or omission that happened in a previous tax return or refund application that is already filed.
When can voluntary VAT disclosure be exercised?
When the VAT registered person or an entity identifies an error or omission in any of the previously filed returns/applications with FTA which has a tax impact of more than AED 10,000 (either net recoverable or payable), the option of voluntary VAT disclosure can be used to rectify the same. There can be situations where the tax payer identifies an error or omission in a previously filed VAT return, but the impact of VAT amount is less than AED 10,000. In such cases, the rectification of such error/omission can be included in the subsequent VAT return to be filed.
What are the procedures in making a voluntary VAT disclosure?
Voluntary VAT disclosure, if applicable shall be made through FTA portal. The registered users can log in to FTA portal with their credentials and click on the tab named “VAT 211-VAT voluntary disclosure/tax assessment”. List of already filed returns will be displayed from which the user can select the return for which the voluntary disclosure is to be made. Once selected, user will be able to update the amounts of the return with the correct figures. Along with such a voluntary disclosure, supporting details shall be uploaded to justify the reason and background for such rectification of VAT return.
What are the other factors to be considered while making a voluntary VAT disclosure?
It is to be noted that there are penalties imposed by FTA for each usage of voluntary VAT disclosure option and the amount of penalty will depend upon the circumstances of each such disclosure. There are fixed penalties and variable penalties linked to the impact of tax amount involved in the voluntary disclosure. Also, the penalty amount increases on more disclosures made for the same return again. Hence it is always advised that VAT returns shall be prepared in a correct manner and to perform a complete review of VAT returns before their submissions to avoid errors and subsequent voluntary disclosures that will cause penalties. Assistance of tax consultants can be sought to make use of their technical knowledge and experience in the preparation and submission of periodic VAT returns.
CDA on voluntary VAT disclosure
CDA has a track record of successfully assisting many entities in their tax and accounting functions across various sectors. CDA is equipped with competent professionals who can provide you with comprehensive support for your tax and accounting processes including guidance on the steps involved in doing a voluntary VAT disclosure in your VAT return, if applicable. We can help you in streamlining your tax and accounting processes to endorse the smooth functioning of the activities in a controlled environment and to adopt the best practices in the region, ensuring compliance with the applicable provisions of tax regulation.
Hope you have a clear understanding of how voluntary VAT disclosure helps companies in tax filings. Do you have further queries on voluntary VAT disclosure? Feel free to contact CDA for tax clarifications.