Voluntary disclosure: what it means in UAE tax.

What voluntary disclosure means

Also called: VD.

A voluntary disclosure is the form a taxpayer uses to tell the Federal Tax Authority about an error in a tax return, a tax assessment or a refund application that has already been submitted or issued. It is set up by Article 10 of the Tax Procedures Law and applies across VAT, excise tax and Corporate Tax.

Filing one is compulsory when the error means too little tax was paid or too large a refund was claimed. It is optional when the error went the other way and the taxpayer overpaid. Since 1 January 2026, an error that changes no tax figure is corrected by voluntary disclosure only in the cases the FTA specifies, and otherwise through a later return.

The Executive Regulation sets when a disclosure is due and when a small error may instead be corrected in a later return. Those procedures were revised from 1 April 2026, so check the current rules before relying on a later return. For SMEs, the reason to act quickly is the penalty gap: from 14 April 2026, a disclosure made before any audit notice costs 1% of the tax difference per month, while the same error found by the FTA also attracts a fixed 15% penalty.

How it works

• Compulsory: understated tax in a return or assessment, or an overstated refund claim (Tax Procedures Law, Article 10, Clauses 1 and 2).
• Optional: overstated tax or an understated refund (Article 10, Clauses 3 and 4).
• No voluntary disclosure may be filed more than five years after the end of the tax period concerned, apart from one about a refund application still awaiting an FTA decision (Article 46, Clause 6).
• Penalty from 14 April 2026: 1% of the tax difference for each month or part month, from the day after the original return was due, or the refund application was filed, until the disclosure is submitted.
• The tax shown in the disclosure is due within 20 business days of submitting it; after that the late payment penalty of 14% a year, charged monthly, applies.
• If the error is disclosed only after an audit notice, or not at all, a fixed 15% penalty is added to the monthly 1% penalty.

Worked example

A Dubai trading company filed its VAT return for January to March 2026 on time; it was due on 28 April 2026. In September 2026 its accountant finds a AED 800,000 sale recorded as zero rated that should have been standard rated. It submits a voluntary disclosure on 1 October 2026 and pays within 20 business days.

Output tax understated (800,000 x 5%)	AED 40,000
Penalty at 1% a month for 6 months or part months, 29 April to 1 October 2026	AED 2,400
Tax and penalty payable	AED 42,400

Had the FTA announced an audit first, a fixed 15% penalty of AED 6,000 would have been added on top of the monthly penalty.

Common mistakes

• Waiting for a later return to fix an underpayment without first checking whether the Executive Regulation requires a voluntary disclosure.
• Filing the disclosure but not paying the tax within 20 business days, which starts the separate late payment penalty.
• Holding back a disclosure until the FTA makes contact, which adds the fixed 15% penalty.

The law

• Federal Decree-Law No. 28 of 2022 on Tax Procedures, Article 1 (definition of Voluntary Disclosure), Article 10 and Article 46 Clause 6, as amended by Federal Decree-Law No. 17 of 2025
• Cabinet Decision No. 74 of 2023 (Tax Procedures Executive Regulation), Article 10 (Submission of Voluntary Disclosure)
• Cabinet Decision No. 40 of 2017 on Administrative Penalties, as amended by Cabinet Decision No. 129 of 2025 (effective 14 April 2026), Table No. 1, items 9, 10, 11 and 12

Frequently asked questions

Can I correct a small error in my next VAT return instead?

Sometimes. The Executive Regulation lets some small errors be corrected in a later return instead of by voluntary disclosure. The procedures were revised from 1 April 2026, so confirm that your error qualifies under the current rules before relying on it.

Is there a deadline after which I cannot disclose?

Yes. No voluntary disclosure can be submitted more than five years after the end of the tax period concerned, except one about a refund application the FTA has not yet decided.

Related terms

VAT tax period · Output tax · Input tax · Tax credit note. See every term in the UAE tax glossary.

For the full picture, read our guide: Five FTA Audit Triggers Every UAE SME Should Avoid.

Work it out with our free VAT penalty calculator.

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