Introduction
The Federal Tax Authority (FTA) has introduced the VAT 211 Form “Self-Disclosure Form” on the VAT Portal. This will help the taxpayer correct any errors or omissions made while filing her VAT return 201 for the previous period. In this article, you will learn what the VAT Voluntary Disclosure Form 211 is and in what situations you should use this form.
What is Voluntary VAT Disclosure Form 211?
Voluntary Disclosure is a form provided by the Federal Tax Authority (FTA) that allows taxpayers to disclose errors or It allows for voluntary notification of omissions to the FTA.
For example, M/S Abdul LCC had filed VAT return 201 for the month of April 2018, declaring standard turnover of AED 15,00,000 and output VAT of AED 75,000. It was subsequently discovered in May 2018 that the actual standard turnover was AED 1,750,000 and the value added tax was AED 87,500.
This means that M/S Abdul LCC underpaid the tax on his VAT return for April 2018 by AED 12,500. Now that an error has been discovered, you must voluntarily notify FTA of the error/omission using the Voluntary Disclosure Form.
When should I use the Voluntary Disclosure Form?
There are certain scenarios in which a taxpayer should use a voluntary disclosure form. This applies if a taxpayer notices an error or omission in a tax return, tax assessment or tax refund application, such as:
1. Paid less or more tax.
If the tax return you filed with FTA or the tax notice you received from FTA turns out to be incorrect and the following situations occur as a result:
1. The tax payable is calculated to be lower than it should have been.
2. Calculating the tax payable
If the tax is higher than it should be
In the above situation, you will need to file a voluntary return to correct this error.
This only applies if the difference (tax paid minus tax actually paid) exceeds Dh10,000.
Looking at the example of M/S Abdul LCC above, we can see that the difference in tax payable is more than Dh10,000.
2. There are more or less tax refunds claimed.
If you discover that your tax refund claim submitted to the FTA is incorrect and the calculation of the refund amount to which you are entitled is higher or lower than it should be, you must voluntarily correct this error.
Deadline for Voluntary Disclosure
If, due to an error or omission, your tax liability is less than the required amount and the difference exceeds AED 10,000, you must make a voluntary disclosure within 20 years. From the date the taxpayer becomes aware of the error until his FTA business day.
How can I correct an error where the tax payable is less than AED 10,000?
As mentioned above, voluntary disclosure is only required if the tax payable (difference) is:dirhams 10,000.
2. There are more or less tax refunds claimed.
If you discover that your tax refund claim submitted to the FTA is incorrect and the calculation of the refund amount to which you are entitled is higher or lower than it should be, you must voluntarily correct this error.
Deadline for Voluntary Disclosure
If, due to an error or omission, your tax liability is less than the required amount and the difference exceeds AED 10,000, you must make a voluntary disclosure within 20 years. From the date the taxpayer becomes aware of the error until his FTA business day.
How can I correct an error where the tax payable is less than AED 10,000?
As mentioned above, voluntary disclosure is only required if the tax payable (difference) is more than AED 10,000 . In all other cases where the difference payable is less than AED 10,000, the error must be corrected on the tax return for the tax period in which the error is discovered.
Conclusion
Although the voluntary disclosure mechanism allows taxpayers to report errors to the FTA, it is also important to note that companies will be subject to penalties on a case-by-case basis. The only way for businesses to avoid situations that result in voluntary disclosure and associated penalties is to submit correct VAT returns and refund requests. Businesses can easily accomplish this by using tax accounting software.
You can also register for VAT Registration on our website:
https://www.vat-registration-uae.com/
