A VAT form 211 is a Voluntary Disclosure form that is provided by the FTA to taxpayers to notify the Federal Tax Authority about any kind of error or omission in the last Tax assessment, return or refund. However, the penalty is levied by FTA on this VAT Voluntary Disclosure Form. Two kinds of penalties can be charged on a disclosure form. The first is the fixed penalty and the second is a percentage based penalty charges depend upon the situation or timing when the disclosure is made.
When you first use the Voluntary disclosure form, the fixed penalty for voluntary disclosure charged is 3000 AED. The next time it will be charged 5000 AED and it will remain the same as many times you use the form for rectifying any error or omission in future. However, the percentage-based penalty varies depending upon what situation and number of times the form is used.
The percentage of penalty is calculated on the unpaid amount of tax later disclosed in the form varies from situation to situation.
- If one makes a voluntary disclosure before a tax audit or assessment and is not yet notified by the FTA then the percentage-penalty is charged 5% on the amount not disclosed earlier.
- If the voluntary disclosure is made after the authority notifies for an audit before the audit begins, then the penalty percentage levied on the unpaid amount is 30%.
- Finally, if the tax audit begins and the disclosure is made during this time, then 50% of the unpaid amount is charged as a penalty.
So if you have underpaid or overpaid during your filing of VAT Return Form 201, then you can simply go to the portal of VAT portal of Federal Tax Authority and download the VAT Voluntary Disclosure Form.
You can use a Voluntary Disclosure Form in the following two situations:
- If you have paid more or less of the actual payable tax amount, then you can rectify this by using a VAT Voluntary Disclosure Form. However, the difference in the actual amount paid and the amount payable should be not less than 10,000 AED.
- If your claim for Tax Refund is more or lesser than the actual amount to be refunded, then you can use the VAT Voluntary Disclosure Form to rectify this.
The rectification through VAT Voluntary Disclosure Form comes with a deadline and one must immediately make the notification within 20 working days of knowing the error has been made.
Also if your differential amount is lesser than 10,000 AED then the rectification can be only made during the tax period in which the error has been identified and in the same tax return.
It is important to remember that repeated using of this VAT Voluntary Disclosure Form will only cost a high a fixed penalty charge and a percentage-based penalty. It is better to prevent these errors as much as possible. This can be done by taking help from experts or simply by using any good software for tax accounting.
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