You can correct an error or omission in a UAE corporate tax return by submitting a Voluntary Disclosure through the EmaraTax platform. The Federal Tax Authority (FTA) has set out a formal process for this. Taking the initiative and disclosing before the FTA initiates contact can reduce the administrative penalties that might otherwise apply.
When voluntary disclosure is required
If you discover that a corporate tax return contains an error or omission resulting in an understated or overstated tax liability, the FTA expects you to correct it. Where the error means too little tax was declared, a Voluntary Disclosure is required; where it means too much tax was declared, a disclosure is optional.
The most common triggers include:
- Misstated income or expenses affecting taxable profit
- Incorrect claims for relief or exemptions
- Data entry or reconciliation errors
The Voluntary Disclosure mechanism through EmaraTax is for errors, omissions, or inaccuracies in a previously submitted return. If you have not yet filed the return, you can simply make corrections before submitting.
Steps for correcting a corporate tax return
The correction process is digital, and is completed through the EmaraTax system, which is accessed using UAEPass. The key steps are:
- Log in to your EmaraTax account using your UAEPass credentials.
- Locate the relevant submitted corporate tax return.
- Select the option to submit a Voluntary Disclosure for that period.
- Enter the corrected figures and, if prompted, provide a brief explanation or supporting information for the change.
- Review the updated calculations that the system will display.
- Submit the disclosure and pay any additional tax due.
If your correction results in a reduced tax liability, you may be able to request a refund, subject to the FTA's assessment and the claim meeting all eligibility criteria.
When voluntary disclosure reduces penalties
According to the FTA's published guidance, submitting a Voluntary Disclosure before the FTA notifies you of a tax audit avoids the fixed 15% penalty. Cabinet Decision No. 75 of 2023 sets the cost: a Voluntary Disclosure carries a monthly penalty of 1% of the tax difference, while failing to disclose before the FTA gives notice of a tax audit adds a fixed penalty of 15% of the difference to the monthly 1%.
This means that if the FTA were to discover an error first, such as during a routine review or audit, a heavier penalty may apply, compared to a scenario where the taxable person has proactively reported the mistake.
An example: Suppose a business identifies an unintentional omission of income from its return, resulting in underreported taxable profit. If the business files a Voluntary Disclosure before receiving any communication from the FTA, it demonstrates good faith. The penalty is then the monthly 1% on the difference only, not the fixed 15% plus the monthly 1%. If the error is found by the FTA first, higher administrative penalties can follow.
After submitting a voluntary disclosure
Once you submit the Voluntary Disclosure, the FTA will process the correction and review the supporting details provided. You will receive a notification through EmaraTax about the status of the disclosure and any further steps required.
If additional tax is due, payment should be made promptly through the portal to limit late-payment penalties. Any additional tax shown in the disclosure is due within 20 business days of submitting it; after that, the monthly late-payment penalty applies.
If a refund claim is involved, the review process may take longer. Detailed supporting documentation will usually be required to justify the reduction in liability.
Practical points for small businesses
- Corrections must be based on accurate, audit-ready documentation
- Written explanations should be concise and specific to the error
- Acting before any contact from the FTA can reduce, but not eliminate, penalties
- All steps must be completed through EmaraTax using UAEPass authentication
In summary, if a corporate tax return you filed contains an error, the formal way to correct it is through a Voluntary Disclosure on EmaraTax; where the error means too little tax was declared and the difference is AED 10,000 or less, it must instead be corrected in the next tax return. Doing so quickly, before FTA review or contact, is the best way to control compliance risks and potential penalties. All corrections must be supported by documentation and are subject to review by the FTA.
