Voluntary disclosures to the FTA
If a VAT, excise or Corporate Tax return has turned out to be wrong, the law may require a disclosure to the Federal Tax Authority within 20 business days. What it costs depends on whether the disclosure arrives before an audit notice does.
Tell us what has arrived
We reply by email. No attachments, nothing sensitive yet.
Where an error has left more than AED 10,000 of tax unpaid, the disclosure is due within 20 business days of the business becoming aware of it, and the penalty adds 1% of the tax for every month or part month until it is made.
What a voluntary disclosure is
A voluntary disclosure is the form a business uses to tell the Federal Tax Authority (FTA) about an error or omission in a tax return, a tax assessment or a refund application. It is governed by Article 10 of the Tax Procedures Law (Federal Decree-Law No. 28 of 2022), which applies to the taxes the FTA administers: VAT, excise tax and Corporate Tax.
The word “voluntary” is misleading. Article 10 sorts errors by which way they cut.
- Errors that cost the FTA must be corrected. If a return or an FTA assessment understated the tax payable, or a refund application claimed more than was due, the law requires a correction.
- Errors against the business may be corrected. If a return overstated the tax, or a refund application claimed too little, a disclosure is optional.
Where a correction is compulsory, the rules below decide whether it has to be a disclosure, how quickly it must be made, and what it costs. By law, a disclosure made before the FTA notifies an audit costs less than the same correction made after one. From 14 April 2026, VAT and excise tax carry the same disclosure penalties as Corporate Tax.
When a disclosure is compulsory
The detail is in Article 10 of the Executive Regulation of the Tax Procedures Law (Cabinet Decision No. 74 of 2023), as amended by Cabinet Decision No. 17 of 2026 from 1 April 2026. Two numbers drive it: AED 10,000 and 20 business days.
| Situation | What the law requires | Time limit |
|---|---|---|
| Tax payable understated by more than AED 10,000 | A voluntary disclosure | 20 business days from becoming aware of the error |
| Tax payable understated by AED 10,000 or less | Correction in the next return: a return for an earlier period that is not yet due, or the return for the period in which the error is found, whichever is earlier | In that return |
| AED 10,000 or less, but no return through which to correct it | A voluntary disclosure | 20 business days from becoming aware |
| Refund overstated by an error in the refund application itself | A voluntary disclosure, whatever the amount | 20 business days from becoming aware |
| Refund overstated because a return or assessment was wrong | The AED 10,000 test in the first three rows | As in those rows |
A business day is any day other than a weekend or an official federal holiday. The day on which the period starts is not counted, and if the last day is not a business day the period runs on to the next one (Article 49 of the Tax Procedures Law). In practice, 20 business days is about four calendar weeks, and longer if an official holiday falls within it.
The clock starts when the business “became aware” of the error. That is a question of fact, not a date printed on a notice. It might be the day a new accountant, an e-invoicing readiness review or a Corporate Tax computation shows that an earlier return was wrong. Recording when and how the error came to light, and working to that date, is the safer course.
Where several errors or several periods are involved, how the AED 10,000 is measured needs care. Quantifying every affected period first is how a business finds out which side of the line it is on.
Errors with no tax effect, and errors in your favour
Until the end of 2025, the Tax Procedures Law required a disclosure even for an error that changed no tax, such as a sale reported against the wrong emirate on a VAT return. Training material and advice written before 2026 still say so. From 1 January 2026, Article 10(5), as amended by Federal Decree-Law No. 17 of 2025, requires a disclosure for that kind of error only in the cases the FTA specifies. In any other case it is corrected through a tax return.
Where an error went against the business, because tax was overpaid or a refund under-claimed, a disclosure is optional (Article 10(3) and (4)). It is still worth acting on. Since 1 January 2026, a refund of a credit balance must be applied for within five years of the end of the relevant tax period under Article 38 of the Tax Procedures Law, and a right not claimed in time lapses. Where those five years have already passed, a transitional rule allows an application within one year of 1 January 2026.
What changed in 2026
Three changes in 2026 bear on disclosures, and older advice and training material predate all of them.
- Federal Decree-Law No. 17 of 2025, from 1 January 2026. It amended the Tax Procedures Law, including the rule on errors with no tax effect above and the time limits for refunds and refund-related disclosures (Articles 38 and 46).
- Cabinet Decision No. 17 of 2026, from 1 April 2026. It amended Article 10 of the Executive Regulation, which now sets out the AED 10,000 and 20-business-day rules in the table above. The separate provision on errors with no tax effect has gone from the Regulation.
- Cabinet Decision No. 129 of 2025, from 14 April 2026. It replaced the VAT and excise penalties for disclosures with the model already used for Corporate Tax under Cabinet Decision No. 75 of 2023. Before 14 April 2026, a VAT or excise disclosure carried a penalty that rose in steps, from 5% to 40% of the tax difference, with the time that had passed since the return was due. A penalty estimate made on that basis needs to be redone.
Where a VAT or excise error relates to a period before 14 April 2026, which penalty schedule applies is a point to confirm before relying on any estimate.
The penalty: before and after an audit notice
For Corporate Tax since 1 August 2023, and for VAT and excise tax since 14 April 2026, the disclosure penalties are a percentage of the “tax difference”: the difference between the tax as it was calculated and the tax as it should have been calculated. The line that matters is whether the FTA has notified the business that it will be subject to a tax audit.
| Position | Fixed penalty | Monthly penalty | Monthly penalty runs until |
|---|---|---|---|
| Disclosure made before any audit notice | None | 1% for each month or part month | The disclosure is submitted |
| Disclosure made after an audit notice | 15% | 1% for each month or part month | The disclosure is submitted |
| No disclosure; the FTA assesses the error | 15% | 1% for each month or part month | The FTA issues its tax assessment |
The monthly penalty runs from the day after the due date of the return that contained the error. For an overstated refund it runs from the day after the refund application was submitted, and for Corporate Tax an error in an FTA assessment runs from the day after the assessment was notified. Every month or part month counts in full, so a few days’ delay can add a whole 1%.
The penalty is on top of the tax. The tax difference itself is payable in every case.
A worked illustration
The figures are illustrative and are not any client’s. A company’s Corporate Tax return for its year to 31 December was due on 30 September, nine months after the year end. It understated the tax by AED 100,000. The monthly penalty starts on 1 October, the day after the due date, and each month or part month from then counts as one.
| Scenario | Months or part months | Penalty rate | Penalty |
|---|---|---|---|
| A. Disclosed on 10 March, before any audit notice | 6 (October to March) | 6 × 1% | AED 6,000 |
| B. The same disclosure on 10 March, made after an audit notice | 6 (October to March) | 15% + 6 × 1% | AED 21,000 |
| C. No disclosure; the FTA issues an assessment on 20 September | 12 (October to September) | 15% + 12 × 1% | AED 27,000 |
In scenario A, a disclosure on the last day of February would have counted five months and cost AED 5,000. On 10 March, the part month of March counts in full. The difference between A and B is the fixed 15%, which turns only on whether the audit notice came first. The difference between B and C is time: a disclosure, even one made after an audit notice, stops the monthly penalty on the day it is submitted.
In all three cases the AED 100,000 of tax is payable as well. The arithmetic is the same for VAT and excise tax, counting from the day after the due date of the return concerned.
Paying the tax
For the late-payment penalty, tax shown in a voluntary disclosure is due 20 business days after the disclosure is submitted. If it is unpaid by then, a penalty of 14% a year is charged on the unpaid tax for each month or part month, from the day after that due date and on the same date each month. Where tax arises from an FTA assessment instead, the 20 business days run from receipt of the assessment.
The tax itself cannot be waived or paid in instalments. Administrative penalties can be, on an application decided by a committee of the FTA under Article 50 of the Tax Procedures Law. Our page on FTA penalties covers waivers and instalments.
Time limits: the five-year rule
Article 46 of the Tax Procedures Law, as amended from 1 January 2026, sets the outer limits.
- Five years to disclose. No voluntary disclosure can be submitted more than five years after the end of the tax period concerned. The one exception is a disclosure about an overstated refund application on which the FTA has not yet issued a decision.
- Five years for the FTA. The FTA generally cannot audit a period or issue an assessment more than five years after its end. If it notifies an audit within the five years, it has four years from that notification to complete the audit or assess.
- An extra year after a late disclosure. A disclosure made in the fifth year after the end of the period gives the FTA one year from the date it is submitted to audit or assess, even if the five years run out first.
- Refund claims. Where a refund application is made in the fifth year, the FTA has two years from the application to audit or assess it.
- Longer periods. Where there has been tax evasion, the limit is 15 years from the end of the period in which it occurred. Where a business failed to register, it is 15 years from the date it should have registered. Our page on tax evasion investigations covers that territory.
Records have to keep pace. A business that discloses in the fifth year must keep the records for the period for one more year from the date of the disclosure, and an audit notified before the normal retention period ends adds four years to it (Article 3 of the Executive Regulation). For Corporate Tax, the normal period is seven years after the end of the tax period.
After a disclosure is submitted
A disclosure is not the end of the matter. The FTA issues an administrative penalties assessment for the disclosure penalty (Article 24 of the Tax Procedures Law), and the tax falls due as described above.
Nor does a disclosure close the period. The FTA keeps its power to audit within the time limits above, and a disclosure that is incomplete or poorly explained can draw the questions it should have answered. If an audit follows, our page on FTA tax audits explains the process.
A penalties assessment is an FTA decision, and any FTA decision can be the subject of a reconsideration request within 40 business days of notification (Article 29). That route, and the Tax Disputes Resolution Committee beyond it, is covered on our page on reconsideration and the TDRC.
If an audit notice has already arrived
A disclosure is still possible after the FTA has notified an audit, but it no longer keeps the fixed 15% away. That charge applies whether the business discloses after the notice or the FTA finds the error itself. What a disclosure after the notice still changes is the monthly penalty: it stops on the date the disclosure is submitted, instead of running until the FTA issues its assessment.
The decision is not only about the penalty. Once an audit is under way, what is disclosed, and how it is explained, becomes part of the audit record. The figures need to be right the first time, and read against what the FTA has asked for.
Preparing a disclosure well
The FTA sets the form a disclosure takes (Article 10(3) of the Executive Regulation). What goes into it is for the business, and that is where a disclosure is made or spoiled.
- Quantify every period. An error found in one return may have been repeated in others. Each affected return needs its own figure, because the penalty runs separately from each return’s own due date.
- Explain the cause. Say what went wrong, when and how it came to light, and what has changed so that it does not happen again. A clear account of the cause is also the record of when the business became aware.
- Build the reconciliation. Show the route from the accounting records to the corrected return figures, period by period, so the numbers can be checked rather than taken on trust.
- Look across taxes. A VAT error that understated sales may mean the Corporate Tax return understated revenue too. The two need to tell the same story.
- Confirm the deadline and the threshold. Check whether the AED 10,000 test is met, whether a return is available instead, and which date falls 20 business days after the business became aware.
- Plan the payment. The tax falls due 20 business days after the disclosure is submitted.
Where there is any suggestion that an error was deliberate, take advice on the position before anything is submitted. Our page on tax evasion investigations explains why.
How we help
Our work is on the position before anything reaches the FTA.
- Establish whether a correction is compulsory, and whether it must be a disclosure or can go through a return
- Fix the 20-business-day deadline from the date the business became aware of the error
- Quantify the tax difference for every affected period, for VAT, excise tax or Corporate Tax
- Estimate the penalty under the schedule that applies, before and after any audit notice
- Prepare the disclosure and the reconciliation behind it
- Check the knock-on effects on other periods and other taxes
- Draft answers to any follow-up questions from the FTA
Further reading
Common questions
What is a voluntary disclosure to the FTA?
It is the form a business uses to tell the Federal Tax Authority about an error or omission in a tax return, a tax assessment or a refund application. The same process applies to VAT, excise tax and Corporate Tax. Where the error left tax underpaid or a refund overstated, a correction is compulsory; where it went against the business, a disclosure is optional.
When is a voluntary disclosure mandatory in the UAE?
When an error in a return or tax assessment has left the tax payable more than AED 10,000 too low, a voluntary disclosure must be made within 20 business days of the business becoming aware of it. A refund application that claimed too much must also be corrected by disclosure within 20 business days, unless the error came from a wrong return or assessment, in which case the same AED 10,000 test applies.
How do I correct a VAT return in the UAE?
It depends on the size of the error. If it underpaid VAT by AED 10,000 or less, it can be corrected in the next return: a return for an earlier period that is not yet due, or the return for the period in which the error was found, whichever comes first. A larger underpayment needs a voluntary disclosure within 20 business days. An error that changes no tax is corrected through a return, unless the FTA has specified that the case needs a disclosure.
What is the penalty for a voluntary disclosure in the UAE?
If the disclosure is made before the FTA notifies a tax audit, the penalty is 1% of the tax difference for each month or part month, from the day after the return was due until the disclosure is submitted. Once an audit has been notified, a fixed 15% of the tax difference is added. The tax itself is payable as well.
Is a Corporate Tax voluntary disclosure different from a VAT one?
The rules are now the same. Both come from Article 10 of the Tax Procedures Law and its Executive Regulation, so the AED 10,000 threshold and the 20-business-day deadline apply to both. Since 14 April 2026, the VAT and excise disclosure penalties follow the Corporate Tax model: 1% a month before an audit notice, and a fixed 15% on top after one.
Can I still make a voluntary disclosure after an FTA audit notice?
Yes. The fixed 15% penalty applies whether the disclosure follows the audit notice or the FTA finds the error itself, but a disclosure stops the 1% monthly penalty on the date it is submitted. Without one, the monthly penalty runs until the FTA issues its tax assessment.
When is the tax due after a voluntary disclosure?
For the late-payment penalty, tax shown in a voluntary disclosure is due 20 business days after the disclosure is submitted. If it is unpaid by then, a penalty of 14% a year is charged for each month or part month it stays unpaid. Penalties, but not the tax, can be the subject of an application to the FTA for a waiver or instalments.
How far back can a voluntary disclosure go?
No voluntary disclosure can be made more than five years after the end of the tax period concerned. The exception is a disclosure about an overstated refund application on which the FTA has not yet decided. A disclosure made in the fifth year gives the FTA one year from its submission to audit the period or issue an assessment, even if the five years run out first.
Start with what you have found
Tell us in outline what needs correcting: which tax, roughly which periods, and whether the FTA has notified an audit. We will tell you whether a disclosure is required, when its 20 business days run out, and how the penalty would be worked out — within one working hour during office hours — Monday to Friday, 9am to 5pm UK time.
An outline is enough at this stage. Please do not send bank statements, trade licences, Emirates ID or your TRN yet.