The Government of the United Arab Emirates has taken many steps to ensure that the businesses which have been coming into the country do not face any problems as well as also ensure that these businesses do not defraud the government and pay their dues in taxes. Lately, the government of the UAE issued a guide to the Voluntary Disclosure for Value Added Tax (VAT) and the Excise Tax. This guide provides a complete overview of how to fill up the Voluntary Disclosure Form and then submit it to the Federal Tax Authority (FTA).
This deals with whether a voluntary disclosure should be made by a taxable person when there is an error in reporting all the details of the taxable entity for the purpose of Value Added Tax (VAT) or Excise tax. deciding if Voluntary Disclosure should be made can become a complex matter and it is recommended that a business should take the assistance of advice of a professional.
What is Voluntary Disclosure?
According to the Tax Procedure Law, a Voluntary Disclosure can be defined as a form which is prepared by the Federal Tax Authority (FTA) and by filling up this form the taxpayer alerts the authority about any omissions or errors which have been made in the assessment and filing of VAT or Tax by the entity.
The disclosure was made in accordance with Federal Law No, 7 of 2017on tax procedures and also the Cabinet Decision no. 36 of 2017 on the Executive Regulation (Federal Law No. 7 on Tax Procedures).
When a Voluntary Disclosure should be made?
According to Article 8 of the Executive Regulations, voluntary disclosure should be made by a taxable entity in the following cases:
- If a taxable entity gains the knowledge that the Assessment or Tax Return in such a manner that the tax to be paid is less than the required amount (AED 10,000 or more) then the entity must make a decision to voluntarily disclose the error within 20 business days from the date of the awareness.
- If the taxable entity gains the knowledge that the tax Assessment or Tax Returns are incorrect in such a manner that the entity will have to pay less (not more than AED 10,000).
- In case the entity has to submit a Tax Return, the entity should correct the error made in the tax return for the period.
- A voluntary disclosure should be made by the taxable entity if there is no tax return to be made. This disclosure should be made within 20 business days of getting to know the error.
- If a tax refund application is submitted in an incorrect manner which results in the total calculation exceeding the correct amount, then the taxable entity should make a voluntary disclosure.
Procedure to Submit a UAE Voluntary Tax Disclosure
The application for the Voluntary Disclosure can be made online at the online portal provided by the FTA. The details which need to be submitted by a taxable entity are as follows:
- The date at which the reporting error was identified.
- Details of the amount which is the correct amount and the amount which was reported earlier.
- The company needs to provide supporting documents for making the voluntary disclosure. These documents should state all the reasons as well as the details for making a voluntary disclosure.
The form will contain pre-populated details of the entity which is filling the details in the form as well as the tax period. The Voluntary Disclosure can also be filed for the Excise Tax. For a better understanding of the entities, the authority has also provided a User Guide about the Voluntary Disclosure available on their website.
Submitting a Voluntary Disclosure in the United Arab Emirates can be a complicated process and it is recommended that a company should take professional assistance in such matters. If you are looking for assistance regarding Voluntary Disclosure in the UAE, then you must look into the services provided by JAXA Chartered Accountants.
JAXA is a reputed Chartered Accounting firm and will help your company to be more profitable and efficient. It will also take care that the company does not face any compliance issues. For more details about the services provided by JAXA Chartered Accountants, feel free to Contact Us. We will be happy to assist you.