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When a UAE VAT voluntary disclosure is required, what it costs since 14 April 2026, and how to ask the FTA to reconsider a decision in 40 business days.
A UAE VAT voluntary disclosure is the EmaraTax form you use to correct an error in a VAT return, tax assessment or refund claim. If the error means you underpaid more than AED 10,000, you must file it within 20 business days of finding it. Smaller errors are corrected in your next VAT return. Reconsideration is a different process: it is how you ask the FTA to review one of its decisions, and you have 40 business days from being notified.
Businesses often confuse the two, and the mix-up can be expensive. The penalty scale changed on 14 April 2026, so advice that was accurate a year ago may now be wrong. The rest of this guide explains which route applies to your situation, what each one costs and how long you have to act.
When a UAE VAT voluntary disclosure is required
A voluntary disclosure (VD) is your own correction of a mistake you made in a filing with the FTA. A reconsideration is your challenge to a decision the FTA made about you.
The rules sit in Article 10 of the Tax Procedures Law (Federal Decree-Law 28 of 2022) and Article 10 of its Executive Regulation (Cabinet Decision 74 of 2023). This table shows how they apply:
Situation | What you must do |
|---|---|
Underpaid tax by more than AED 10,000 | File a VD within 20 business days of becoming aware |
Underpaid by AED 10,000 or less | Correct it in the next return not yet due, or in the return for the period you found it, whichever is earlier (VD if no such return exists) |
Error with no tax effect | Correct it in a return, unless the FTA requires a VD (from 1 Jan 2026) |
Error in your favour (overpaid) | VD optional |
Overclaimed refund | VD required |
There is also a time limit. No VD can be filed more than 5 years after the end of the tax period (Tax Procedures Law Art 46(6), as amended by Federal Decree-Law 17 of 2025). The only exception is a VD about a refund claim the FTA has not yet decided. For VAT, this limit has existed since 1 January 2023 under Article 79 bis of the VAT Decree-Law. If you file a VD in the fifth year, the FTA can still audit or assess that period within 1 year of the date you file it.
How to file a voluntary disclosure on EmaraTax
The filing itself takes less time than the preparation behind it. Follow these steps:
Find and quantify the error. Work out the amount per return and per box. A total figure is not enough.
Choose the route. Use the AED 10,000 rule to decide between a VD and a correction in your next return.
Submit on EmaraTax. Open the VAT return concerned and submit a voluntary disclosure. Include a short explanation of what went wrong and attach your workings.
Pay the extra tax. Payment is due within 20 business days of submitting.
Fix the cause and keep the file. Correct the process, coding or invoicing problem that caused the error, and keep the full record in case of an audit.
Many people search for a "VD letter sample". The VD is not a letter, though. It is an EmaraTax form. What helps the FTA reviewer is a clear cover explanation and a reconciliation from your ledger to the corrected boxes. Our EmaraTax guide walks through the screens.
What a voluntary disclosure costs since 14 April 2026
Cabinet Decision 129 of 2025 amended the VAT penalty scale with effect from 14 April 2026. These are the current penalties:
Event | Penalty |
|---|---|
VD before any FTA audit notice | 1% of the tax difference per month or part month, from the day after the return was due until the VD is filed |
VD after an audit notice, or no VD | 15% fixed plus 1% a month |
Payment of tax in the VD | Due 20 business days after filing; late payment then accrues at 14% a year, charged monthly |
Incorrect return | AED 500, unless corrected in time |
Under the old rules, the VD penalty was a one-off percentage that rose with time. It started at 5% within 1 year and reached 40% after 4 years. Failing to disclose before an audit cost 50% plus 4% a month.
The new scale is much cheaper if the FTA finds the error first. It can cost more, however, for errors disclosed 1 to 4 years late. For example, AED 200,000 disclosed 18 months late now costs 18% (AED 36,000). Under the old rules it would have cost 10% (AED 20,000).
The following is illustrative arithmetic only. Suppose a VAT quarter ended on 31 March 2025, the return was due on 28 April 2025, and AED 60,000 of output VAT was left out. The VD is filed on 15 October 2026. That is 18 months or part months from 29 April 2025, so the penalty is AED 10,800. You also pay the AED 60,000 of tax within 20 business days.
If the FTA had notified an audit first, the penalty would be 33%, or AED 19,800. Waiting another six months before disclosing would add a further AED 3,600. Every month of delay adds 1%, and being found first adds 15%. Corporate tax uses the same scale, so a corporate tax voluntary disclosure follows the same logic.
Reconsideration: asking the FTA to review its decision
Under Article 29 of the Tax Procedures Law, you can ask the FTA to reconsider any decision it makes about you. This includes a penalty, an assessment, a refused registration, a deregistration or a refund decision. FTA reconsideration is free.
To file:
Where: EmaraTax, under Other Services, then Reconsiderations.
When: within 40 business days of being notified of the decision.
What to include: the facts, your legal grounds and supporting evidence. A bare "please waive" is unlikely to succeed.
The FTA decides within 40 business days and notifies you within 5. Its service page gives up to 45 business days in total. Extensions to the deadline are available only in limited cases under Article 35. Tax assessments also have a separate review route, so check which one applies to your notice before filing.
A penalty waiver request is a different process with its own conditions. Our article on the UAE corporate tax penalty waiver explains who qualifies.
After reconsideration: the Tax Disputes Resolution Committee and the courts
Articles 30 to 36 of the Tax Procedures Law set out the escalation path:
Reconsideration. This is always the first step.
Objection to the Tax Disputes Resolution Committee (TDRC). File within 40 business days if you disagree with the reconsideration decision or the FTA does not decide in time. A judge chairs the committee, sitting with two registered tax experts. The TDRC will not accept an objection unless a reconsideration came first and the disputed tax has been paid in full.
TDRC decision. The committee decides within 20 business days. The decision is final if tax and penalties total AED 100,000 or less.
Court appeal. For larger amounts, you can appeal to court within 40 business days. You must pay the tax in full and pay or guarantee at least 50% of the penalties.
The court stages need a lawyer. Cosmos is not a law firm and does not represent clients at the TDRC or in court.
Who can file for you, and where Cosmos fits
Only three parties can file a reconsideration: you, your FTA-registered tax agent or your legal representative. Advisers who are not registered tax agents cannot file for you. You can check any agent's status on the FTA register of tax agents at tax.gov.ae before you hand over access.
Many VAT errors start in the books, with miscoded supplies, missing reverse-charge entries or invoices that never reached the ledger. Cosmos keeps the books and files UAE corporate tax and VAT returns through an FTA-registered tax agent, which also files voluntary disclosures and reconsiderations. That means finding errors, quantifying them per box and preparing the disclosure file before an audit notice arrives, not after. If your records have outgrown spreadsheets, read when DIY bookkeeping stops working.
Frequently asked questions
Is there a penalty if the error is in my favour? There is no percentage penalty: a VD is optional when you overpaid, and the 1% monthly penalty applies only to tax you underpaid. The fixed AED 500 penalty for an incorrect return can still apply unless the return was corrected before its due date.
Can I correct a small VAT error in my next return instead of a voluntary disclosure? Yes, if the underpayment is AED 10,000 or less. You correct it in the next return not yet due, or in the return for the period you found it, whichever is earlier. If no such return is available, file a VD.
How far back can I file a voluntary disclosure? Up to 5 years from the end of the tax period. The exception is a VD about a refund claim the FTA has not yet decided.
What happens if the FTA finds the error before I disclose it? You pay a fixed 15% plus 1% a month instead of 1% a month alone. On AED 60,000, that is the difference between AED 10,800 and AED 19,800.
Can I ask the FTA to reconsider a voluntary disclosure penalty? Yes. A penalty is an FTA decision, so you can file a reconsideration within 40 business days with your grounds and evidence.
Do I have to pay the tax before asking for reconsideration? Not for the reconsideration itself. You must pay the disputed tax in full before the TDRC will accept an objection.
Does the same process apply to corporate tax? Largely, yes. The same VD rules and penalty scale apply, and our guide on missing the corporate tax deadline covers related penalties.
The 2026 rules reward speed above everything else. Disclose quickly, quantify the error carefully, and keep reconsideration for FTA decisions you can genuinely challenge with evidence. If you suspect an error in a past return, start counting from the day you found it, because every month you wait adds 1% to the cost. If you want help checking your returns before the FTA does, book a call with Cosmos to quantify and disclose any error.
