On this page
- Voluntary Disclosure in Plain Terms
- Disclosure or Next Return: The Rules at a Glance
- How the 20 Business Days and the AED 10,000 Test Work
- How It Works for Corporate Tax
- Error Penalties in Force Since 14 April 2026
- What the Penalties Look Like in Practice
- Time Limits After the 2026 Tax Procedures Amendments
- Submitting a Disclosure on EmaraTax
- Situations That Usually Need a Disclosure
- Common Mistakes
- Frequently Asked Questions
Voluntary Disclosure in Plain Terms
A voluntary disclosure is the form you submit on EmaraTax to correct a tax return or refund application you have already sent to the Federal Tax Authority (FTA), or a tax assessment the FTA has issued. The rules sit in Article 10 of Federal Decree-Law No. 28 of 2022 on Tax Procedures and Article 10 of its Executive Regulation (Cabinet Decision No. 74 of 2023, as amended by Cabinet Decision No. 17 of 2026), and they apply to VAT and Corporate Tax alike.
The short version: if an error means you paid less tax than you owed and the difference is more than AED 10,000, you must disclose within 20 business days of becoming aware of it. If the difference is AED 10,000 or less, you can usually fix it in a later return.
If you overpaid, a disclosure is optional. Two 2026 changes matter most: the Tax Procedures Law time limits were rewritten from 1 January, and VAT penalties moved to a monthly model on 14 April.
Disclosure or Next Return: The Rules at a Glance
| Tax underpaid by more than AED 10,000 | Voluntary disclosure within 20 business days of becoming aware of the error |
|---|---|
| Tax underpaid by AED 10,000 or less | Correct it in a later return; disclose within 20 business days only if no return is available, for example after deregistration |
| Refund application overstated | Voluntary disclosure within 20 business days, unless the error came from a return or assessment, in which case the same AED 10,000 test applies |
| Tax overpaid or refund understated | Disclosure is optional, within the five-year limit |
| Error with no effect on the tax due | Corrected through a tax return, except in cases where the FTA requires a disclosure |
| More than five years since the end of the tax period | No disclosure possible, except one linked to a refund application the FTA has not yet decided |
How the 20 Business Days and the AED 10,000 Test Work
The 20 business days run from the date you become aware of the error, not from the date of the return, and the disclosure form asks you for that date. The AED 10,000 test looks at the tax difference in the return that was wrong.
Where it is AED 10,000 or less, you correct it in the return for the period in which you found the error, or in an earlier period's return whose deadline has not yet passed, whichever comes first. If you spot a problem before the original return's due date and correct it by then, no penalty applies, because the monthly penalty only starts the day after the return was due.
How It Works for Corporate Tax
Corporate Tax uses the same Executive Regulation, applied to an annual return. The FTA's Corporate Tax Returns guide allows an understatement of AED 10,000 or less from a previous period to be corrected in a later return, and several errors can be combined if their total stays within AED 10,000.
The return has a question for reporting such an adjustment. Anything larger needs a voluntary disclosure within 20 business days. Corporate Tax penalties come from Cabinet Decision No. 75 of 2023, which has used the 1% monthly model since 1 August 2023, so nothing changed for Corporate Tax on 14 April 2026.
For calendar-year companies, the first returns (for 2024) were due by 30 September 2025, so an error in one of those disclosed today is already more than a year into the monthly penalty.
Error Penalties in Force Since 14 April 2026
| Incorrect return | AED 500, not charged if the return is corrected by its filing deadline (and, for VAT, not where the disclosure leaves the tax due unchanged) |
|---|---|
| Disclosure before any audit notice | 1% of the tax difference for each month or part month, from the day after the return was due until you submit the disclosure |
| No disclosure before an audit notice | Fixed 15% of the tax difference, plus 1% a month until you disclose or, if you never do, until the FTA issues its assessment |
| Late payment | 14% a year, charged monthly on unpaid tax; tax shown in a disclosure is due 20 business days after you submit it |
| Legal basis | Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 129 of 2025 for VAT; Cabinet Decision No. 75 of 2023 for Corporate Tax |
What the Penalties Look Like in Practice
A disclosure made after the deadline that changes the tax can attract both the AED 500 and the 1% a month. Take a VAT quarter ending 31 March 2026, return due 28 April 2026, with an AED 40,000 underpayment disclosed on 15 October 2026. That is six months or part months, so roughly AED 2,400 plus AED 500, and no late payment penalty if the tax is paid within 20 business days.
Had an audit notice arrived first, the fixed 15% would add AED 6,000. EmaraTax calculates the exact figure. The pre-April 2026 position for VAT was different: a disclosure cost 5% to 40% of the tax difference depending on how long the error had stood, an error not disclosed before an audit notice cost 50% plus 4% a month, and late payment ran at 2% plus 4% a month up to 300%.
The new model is far cheaper once an audit starts, but for an error four or five years old, 1% a month now exceeds the old 40% ceiling. No separate transitional rule appears in the published consolidated penalty decision or in the FTA's announcements, so for errors in returns due before 14 April 2026, check how the penalty was calculated before you pay.
Time Limits After the 2026 Tax Procedures Amendments
Federal Decree-Law No. 17 of 2025 rewrote the time limits in the Tax Procedures Law from 1 January 2026. Under the new Article 46, the FTA generally cannot audit or issue an assessment more than five years after the end of the relevant tax period, and you cannot submit a voluntary disclosure after that point either.
There are exceptions, and advisers do not all read the amended extension rules the same way, so check the dates for the specific period. Where a refund is claimed towards the end of the five-year period, the FTA has two years from the claim to audit it.
A disclosure can still be made after five years if it relates to a refund application the FTA has not yet decided. Tax evasion carries a 15-year limit. Refunds are capped too: a credit balance must generally be claimed within five years of the end of the tax period in which it arose, or the right is lost.
Important
Older Credit Balances: Window Closes 31 December 2026
Article 3 of Federal Decree-Law No. 17 of 2025 gives a one-off window. If your five-year period to reclaim a credit balance had expired by 1 January 2026, or expires during 2026, you can still apply for a refund or use the balance against liabilities until 31 December 2026. A disclosure linked to that application can follow within two years, as long as the FTA has not decided it, and the FTA has two years from the application to audit it.
Submitting a Disclosure on EmaraTax
- 1
Quantify the error first
Work out the tax period, the affected return boxes, the corrected figure for each and the tax difference. Note the date you first identified the error; if there are several, use the earliest.
- 2
Start from the filed return
In EmaraTax, open the VAT or Corporate Tax section for the taxable person, find the filed return for the affected period and start the voluntary disclosure from that return.
- 3
Enter corrected totals, not differences
The form shows the figures as originally reported. Enter the corrected total for each affected box and leave the rest unchanged. The system works out the difference.
- 4
Attach a supporting letter and evidence
The letter sets out the background, describes each error, explains why you are disclosing and shows which boxes change. Back it with invoices, credit notes, import declarations or reconciliations.
- 5
Submit and pay within 20 business days
Confirm the declaration and submit. Any additional tax is due 20 business days after submission, after which the late payment penalty applies.
- 6
Deal with what follows
The FTA reviews the disclosure and may ask for more information, and penalties appear in your EmaraTax account. Update your ledgers, and issue any tax credit note or replacement invoice the fix requires.
Situations That Usually Need a Disclosure
- A sale wrongly zero-rated, such as an export that did not meet the conditions: issue a tax credit note and a new 5% invoice, and disclose for the original period if the VAT exceeds AED 10,000
- Input tax over-claimed, including VAT recovered without a valid tax invoice or on purchases that do not qualify
- A sale reported in a later period than the one it belonged to, which leaves the earlier return understated
- Standard-rated sales reported under the wrong emirate, or zero-rated or exempt supplies misreported. FTA Decision No. 8 of 2024 requires a disclosure here even though the tax does not change
- Reverse charge on imported services left out. With full input tax recovery there is no tax difference and, since 1 January 2026, this can generally go through a return; where recovery is restricted, the AED 10,000 test applies
- A Corporate Tax return that omitted income, deducted a non-deductible expense or claimed a relief without meeting its conditions, with a tax effect above AED 10,000
Common Mistakes
- Putting a correction of more than AED 10,000 into the next return instead of disclosing it. The wrong method can still lead to penalties at audit
- Entering only the difference on the EmaraTax form instead of the corrected box totals
- Disclosing on time but paying after the 20 business days
- Waiting for the FTA to raise it, which adds the fixed 15%
- Correcting the return but not the paperwork, so the ledgers no longer reconcile to what was filed
Frequently Asked Questions
- Do I have to disclose an error that means I overpaid?
- No, it is optional. If you want the money back, act within five years of the end of the tax period, because disclosures and refund claims both stop there.
- Can I still disclose after the FTA has notified a tax audit?
- Yes, and it usually makes sense, because the 1% monthly penalty stops when you submit. The fixed 15% of the tax difference still applies once the audit notice has been issued.
- Can the FTA waive the penalties?
- There is no automatic waiver. You can apply through the FTA's service for instalment, waiver and refund of administrative penalties, and each request is decided on its own facts.
- My error is from 2021. Can I still disclose it?
- Only within the five-year limit. A VAT quarter ending 31 December 2021, for example, can no longer be disclosed after 31 December 2026, unless the disclosure relates to a refund application the FTA has not yet decided.
Important
Check the Position Before You Act
This guide reflects the Tax Procedures Law, its Executive Regulation, the penalty decisions and FTA guidance as they stood on 1 November 2026. The FTA can specify further cases that need a disclosure, and these rules have changed more than once in the past year. It is general information rather than advice on your particular facts, so confirm the current position before you file.
Talk Through an Error Before You Disclose
Marifah Tax Advisory can review the error with you, work out if it needs a voluntary disclosure or can go in a later return, estimate the tax difference and the likely penalty, and prepare the disclosure and supporting letter for EmaraTax. Contact us for a free consultation.