New VAT Correction Guidelines in Abu Dhabi: Key Takeaways from the FTA's 2025 Update

VAT return filing is an important requirement for a business in Abu Dhabi, UAE, to maintain compliance and mitigate penalties. The UAE Federal Tax Authority announced Decision No. 8 of 2024 in November, effectively implemented on January 1st, 2025, and outlines the new mechanism for addressing errors and omissions in VAT return filing in Abu Dhabi.

This new mechanism introduces a simplified and efficient approach to rectifying VAT errors that have no impact on total tax liability. The taxable entity has the option to submit a Voluntary Disclosure to amend VAT return errors in Abu Dhabi, correct the tax amount owed, and adhere to the UAE’s VAT compliance.

With the new VAT correction guidelines, taxpayers can effectively correct VAT return errors, submit accurate VAT return filings in Abu Dhabi while ensuring compliance with the UAE’s FTA, and avoid hefty penalties.

Let’s review the key elements of the decision and its implications for VAT compliance in Abu Dhabi, UAE.

Essential Guidelines for Correcting Errors and Omissions in the UAE’s VAT Return Filings

Adhering to tax regulations is essential for a successful business in the UAE. Under Federal Decree Law No. 8 of 2017, taxpayers can correct errors by submitting a Voluntary Disclosure if the error is specified in Article 2 and does not affect the total tax owed. This encourages taxpayers to voluntarily rectify any mistakes in their VAT return filings in Abu Dhabi, UAE.

The FTA specifies certain errors that businesses must rectify:

• Reporting Supplies under Incorrect Emirate: Businesses can amend the VAT errors if taxable supplies are mistakenly reported under the wrong Emirate.

Example: Reporting Dubai supplies in the Abu Dhabi section of the VAT return.

• Zero-rated supplies Reporting errors: Misreporting of zero-rated supplies can be corrected by filing a voluntary disclosure with the UAE’s FTA

Examples: Goods or services exported, international transportation, and qualifying healthcare or educational services.

• Not reporting Exempt supplies: Incorrect reporting of exempt supplies can be adjusted according to this decision. As exempt supplies are VAT-exempt, maintaining proper VAT documentation ensures accuracy and transparency.

VAT Error Correction in Abu Dhabi, UAE: Understanding the FTA Guidelines

The approach to correcting VAT return errors in the UAE varies according to the value and impact of the mistake:

• For Tax Errors Below AED 10,000: Any VAT return error with a discrepancy of AED 10,000 or less should be corrected in the VAT return for the period in which the error was identified. If errors are found after the period has elapsed, the taxpayer must submit a voluntary disclosure to the FTA if the business is not VAT registered.
• For Tax Error Exceeding AED 10,000: The UAE’s FTA must be alerted through a formal voluntary disclosure when a tax return error exceeds AED 10,000.

However for the errors specified in the previous section, a Voluntary Disclosure will have to be submitted even if the same does not affect the net VAT due.

A voluntary disclosure must be submitted within 20 working days from the date the error is detected and must comply with the specified format mentioned by the UAE’s  FTA.

• VAT refund error: Taxpayers in Abu Dhabi, UAE, regardless of their business location or business activity in the UAE, must adhere to the specified steps in correcting mistakes in VAT refund applications to the UAE’s FTA.

1. A voluntary disclosure must be submitted within 20 business days upon discovery of an error in a tax refund application, regardless of the error’s value.
2. Submitting a VAT refund without valid documents may cause rejection by the UAE’s FTA.
3. Providing wrong bank details may lead to payment delays or failed transactions.

Businesses in the UAE should follow a corrective method- either by submitting a Voluntary disclosure or amending the returns in the future, depending on the nature of the error to ensure VAT compliance in the Abu Dhabi,  UAE.

Key Scenarios That Require Voluntary Disclosure under UAE VAT Regulations

According to the UAE’s FTA Decision No. 8 of 2024, a voluntary disclosure is required under the following conditions:

• Errors in VAT returns that exceed AED 10,000
• Discovery of inaccuracies in submitted VAT refund applications
• Identification of erroneous tax assessments by the UAE’s FTA.
• Errors that cannot be rectified through a subsequent VAT return filing in Abu Dhabi, UAE

Timely submission of voluntary disclosures ensures compliance, mitigates the risk of penalties, and ensures accurate VAT return filing in Abu Dhabi, UAE. Partner with Jaxa, an FTA approved Tax agent and an expert in VAT services such as VAT registration, return filing, VAT compliance, and audit in and across the UAE, Abu Dhabi, and Dubai.

VAT Return Filing Impact on Abu Dhabi, UAE Taxpayers

With the new mechanism in place, taxpayers can now rectify VAT errors more easily, ensuring continued VAT compliance with UAE tax laws and minimizing the risk of penalties.

This allows taxpayers in:

• Perform a detailed review of VAT returns to identify discrepancies.
• Determine whether the identified mistakes affect the due tax amount.
• Submit a Voluntary Disclosure promptly to rectify any eligible errors.

How Jaxa, a top VAT Consultant in Abu Dhabi, Can Help?

Ensure effortless VAT compliance in Abu Dhabi by partnering with Jaxa. Jaxa is a FTA approved auditors in Abu Dhabi. Our team of certified VAT consultants in Abu Dhabi, UAE has a wealth of experience and expertise delivering extraordinary services such as timely VAT registration, accurate VAT return filing, voluntary disclosure, VAT compliance, and VAT audit while minimizing huge penalties.

Jaxa Chartered Accountants, a UAE FTA registered tax agent, delivers other services such as corporate tax, accounting and bookkeeping, audit, and assurance services. Our team of tax experts provides financial and taxation advisory services while adhering to UAE tax regulations and maintaining accuracy and transparency in tax filing. Our qualified VAT consultant helps in keeping clients updated on the latest amendments by the UAE’s FTA and guides clients to follow the guidelines to stay compliant with UAE tax regulations.

Are you looking for expertise in keeping your business compliant and free from penalties? Let’s plan to partner with Jaxa and make it a hassle-free process.

Book a free consultation for any VAT and other compliance requirements..