he FTA has introduced Form 211 – VAT Voluntary Disclosure Form to enable Taxpayers to voluntarily disclose to the FTA, any errors or omissions above the value of AED 10,000 before the Authority through a Tax audit or Assessment identifies them.
What Is voluntary disclosure:
Every Taxable person has an option to rectify the contents of the VAT Return (Form 201) which were already filed. By using the voluntary disclosure option, the taxable person can rectify the amount of tax disclosed by him previously. One can use the form 211 – VAT voluntary disclosure to inform the authority and rectify the same voluntarily before the authority finds it before a tax audit or through an assessment.
How to use voluntary disclosure form 211
If the taxable person has identified an error or omission that has been made in a previous VAT Return, the Taxpayer can make a voluntary declaration via the VAT Voluntary Disclosure Form 211. This form can be accessed by logging into the FTA website.
The taxable person can select the appropriate period for the voluntary disclosure by clicking the ‘Submit Form 211’button.
When should a tax payer use VAT voluntary disclosure 211
If a taxable person makes an error or omission or a wrong treatment of tax by which the output tax payable or input tax recoverable is more than AED 10,000/- for a particular period then, he must use the VAT Voluntary Disclosure form 211 to inform the authority. The form will show the original figures disclosed under “as reported” and will give an option to edit the amount under separate box named “as current”. Further the reason for such discrepancy also should be disclosed.
Once the newly arrived figures are written in the respective boxes under “as current”, the total tax liability under box number 14 also gets changed. This will be the actual tax liability to be paid to the authority. Further, the taxable person should also upload the supporting documents for such voluntary disclosure. It includes a letter describing the background of the facts and a detailed description of the errors disclosed, the reason for voluntary disclosure as well as the impact on the relevant boxes of the tax return.
Penalty while using the VAT Voluntary Disclosure Form 211?
There are two types of penalties.
- Fixed penalty
- Percentage based penalty
Fixed penalty – if the tax payer uses the VAT Voluntary Disclosure form 211 for the first time, AED 3,000/- shall be levied. For every repetition in using the VAT Voluntary Disclosure form 211 AED 5,000/- shall be charged.
Percentage based penalty – if the tax payer discloses less than the actual tax liability in the return and subsequently uses Form 211 VAT Voluntary Disclosure form, the percentage-based penalty will be as follows:
- If the taxable person makes a voluntary disclosure before the authority notifies (by way of tax audit or tax assessment), 5% of the tax amount which was not disclosed earlier will be the penalty.
- If the authority notifies the taxable person for a tax audit and during the tax audit if he makes a voluntary disclosure by using VAT Voluntary Disclosure Form 211, he will be liable to pay 50% of the tax amount.
- If the taxable person makes a voluntary disclosure after the authority notifies for a tax audit but before starting the tax audit, he has to pay 30% of the tax amount as a penalty.
What if the difference in tax amount identified is less than AED 10,000/-?
If a taxable person makes an error or omission or a wrong treatment of tax by which the output tax payable or input tax recoverable is less than AED 10,000/- for a particular tax period, then he need not use the VAT Voluntary Disclosure form 211 to inform the authority. He can rectify such errors in the subsequent VAT Return without a separate disclosure.