In November 2024, the UAE Federal Tax Authority (FTA) issued Decision No. 8 of 2024, effective from January 1, 2025, introducing clear and comprehensive guidelines for businesses to address errors and omissions in their VAT returns. This decision outlines a structured process for correcting mistakes that do not alter the total tax liability, ensuring greater transparency and compliance. Under the new regulation, taxpayers who identify VAT errors or omissions can submit a Voluntary Disclosure to rectify these inaccuracies, provided the VAT error corrections does not impact the amount of tax payable and aligns with the specific scenarios detailed in Article 2 of the decision. 

This streamlined process promotes transparency and encourages taxpayers to maintain accurate filings. With the decision now in effect, it is essential for businesses to understand these new procedures thoroughly to ensure compliance with the FTA’s requirements and minimize the risk of penalties through VAT errors or omissions. 

What Types of VAT Errors and Omissions Can Be Corrected Under the New Decision? 

• Misreporting Supplies Between Emirates: 

Taxable supplies intended for one emirate but mistakenly reported under another can be corrected. 
Example: Recording supplies from Dubai under Abu Dhabi in the VAT return. 

• Errors in Reporting Zero-Rated Supplies: 

Mistakes in reporting zero-rated supplies, such as overstating or understating their value, can be adjusted. 
Examples of zero-rated supplies: Exports of goods and services, international transport, and qualifying healthcare or education services. 

•  Misreporting Exempt Supplies: 

Errors in reporting exempt supplies, such as incorrect valuations of residential property rentals or financial services, can now be rectified. While exempt supplies are not subject to VAT, precise reporting is essential for compliance. 

VAT Errors and Omissions: Steps for Minor and Significant Mistakes 

• Minor Errors (Below AED 10,000): Correct these errors directly in the following VAT return. 

• Significant Errors (Above AED 10,000): 

• Voluntary Disclosure: File Form 211 within 20 working days of identifying the error. 

• Supporting Documentation: Include invoices, calculations, and other relevant records when submitting the voluntary disclosure. 

When is a Voluntary Disclosure Necessary for VAT Errors and Omissions? 

Voluntary disclosure is necessary in the following situations of VAT errors and omissions: 

• Errors exceeding AED 10,000 in VAT returns: If the error in the VAT return exceeds AED 10,000, it must be disclosed voluntarily. 

• Discrepancies in tax refund applications: Any inconsistencies found in submitted tax refund applications must be disclosed. 

• Mistakes in tax assessments issued by the FTA: If the FTA issues a tax assessment that contains errors, businesses must disclose these mistakes. 

• Significant errors that cannot be corrected in the current VAT return: If an error cannot be corrected within the current VAT return period, voluntary disclosure can be filed.

FTA Decision No. 8 of 2024 underscores the importance of accurate VAT reporting. By understanding the new regulations and adhering to the outlined mechanism for correcting VAT errors and omissions, businesses can maintain compliance, avoid penalties, and ensure smooth operations in the UAE. 

Simplify VAT Compliance with Expert Solutions from MS 

Managing VAT compliance can be seamless when you partner with MS. Our dedicated team of tax experts specializes in VAT registration, precise filings, voluntary disclosures, and meticulous recordkeeping, ensuring your business remains fully compliant with FTA regulations while avoiding costly penalties. Whether it’s identifying VAT errors and omissions, preparing accurate Voluntary Disclosures, or ensuring compliance with the specified scenarios under Article 2, we handle it for you. Let us take the complexity out of VAT compliance so you can focus on growing your business with confidence.