Filing VAT returns is mandatory for VAT-registered organizations in the UAE. It seems like a very straightforward task, but unfortunately, some small mistakes often result in hefty fines to VAT-registered businesses in the UAE. It is often observed that Small Mistakes or Incorrect VAT filing often result in fines imposed by the Federal Tax Authority.
This article provides you with the information on how to avoid filing VAT returns in the UAE with mistakes through valid references that would be applicable in 2026. Let’s get more information in the below mentioned guide.
VAT Return in the UAE
A VAT return is a formal report submitted to the Federal Tax Authority that showcases the total taxable supplies made, output VAT collected from consumers, input VAT paid on business expenses and the net VAT payable or refundable.
Every VAT-registered business must submit VAT returns, even if there were no sales during the tax period. Nil returns are still mandatory. VAT returns are filed electronically through the Federal Tax Authority portal.
VAT Filing and Deadlines
The Federal Tax Authority assigns businesses either monthly or quarterly tax periods. The filing deadline is 28 days from the end of the tax period. Missing the deadline results in an automatic hefty fines or penalty. Late filing penalty starts from AED 1,000 for the first late submission, and AED 2,000 for repeated late submissions within 24 months. Legal reference is the Cabinet Decision No. 49 of 2021 on Administrative Penalties.
Step 1: Verify VAT Registration
Filing under the wrong tax period or incorrect TRN may lead to rejected submissions or compliance flags. Before filing your VAT return, confirm:
- Your Tax Registration Number (TRN) is active
- Your business details on the FTA portal are correct
- Your tax period matches the filing period
Step 2: Maintain Records
Accurate bookkeeping is the most important factor in error-free VAT filing. UAE VAT law requires businesses to maintain records for at least five years. For real estate-related records, the period extends to 15 years. All VAT invoices must meet Federal Tax Authority requirements, including Tax Return Number details, VAT amounts, and invoice dates.
Your records must include:
- Sales invoices
- Tax invoices
- Credit and debit notes
- Import and export documents
- Bank statements
- Expense receipts
Legal reference: Article 78, Federal Decree-Law No. 8 of 2017.
Step 3: Reconcile Data
Before submitting your VAT return, reconcile your accounting records with bank statements, point-of-sale reports and accounting software reports. Reconciliation ensures your VAT figures match your financial data.
Common mistakes include:
- Declaring sales twice
- Missing cash sales
- Incorrect VAT rates
- Claiming non-recoverable input VAT
Step 4: Output VAT and Input VAT
- Output VAT is the VAT you charge on your customers.
- Input VAT is paid on eligible business purchases.
You can claim a refund of the input VAT only if:
- It is related to the taxable supplies of the company.
- A valid tax invoice is available
- It is not blocked by UAE VAT law
Blocked input VAT is made up of:
- Entertainment expenses for non-employees
- Motor vehicles for private use
- Residential facilities for employees (except specified)
Legal reference: Article 53, Executive Regulations of VAT.
Step 5: Use the FTA VAT Return Form Correctly
The UAE VAT return form includes multiple sections. Each section must be completed with accuracy and clearly. Entering figures in the wrong box is a common error that leads to audits.
Key sections include:
- Standard-rated supplies (5%)
- Zero-rated supplies
- Exempted supplies
- Reverse charge mechanism (if applicable)
- Imports and exports
Step 6: Review reverse charge transactions
If your company is importing goods or services from external jurisdictions to the UAE, then reverse charging could apply.
“Under this rule:”
- VAT is accounted for by the buyer
- Both output VAT and input VAT are shown on the same return
- Incorrect reporting of reverse charge transactions is often an area of compliance risk.
Legal reference: Article 48, Federal Decree-Law No. 8 of 2017.
Step 7: Clarify before submission
Before filing your VAT return:
- All the figures need to be carefully reviewed
- Verify that totals reconcile with your books.
- Verify VAT Computations
All required areas must be filled in.
After filing, VAT returns cannot be altered. Alterations must be made through voluntary disclosure.
Step 8: On-time VAT payments
VAT returns must be filed along with VAT payments, and this must be submitted by the same deadline. Late payment penalties include:
- 2% penalty: Immediately following the deadline
- 4%, after seven days of delinquency
- 1% daily penalty subsequently (capped at 300%)
Legislation cited: Cabinet Decision No. 49 of 2021.
Correcting Errors Through Voluntary Disclosure
If you discover an error after submission, you must file a voluntary disclosure.
Voluntary disclosure is required when:
- VAT errors exceed AED 10,000
- Incorrect tax treatment is identified
Timely disclosure reduces penalties.
Legal reference: Article 10, Cabinet Decision No. 40 of 2017.
Common VAT Filing Errors to Avoid
- Filing after the deadline
- Using incorrect VAT rates
- Claiming blocked input VAT
- Misclassifying supplies
- Ignoring reverse charge obligations
- Poor record-keeping
Avoiding these mistakes significantly reduces audit risk.
Why is professional support needed?
VAT compliance in the UAE is technical and strictly enforced. Regulations are detailed. Penalties are real. Professional tax advisors help with:
- Accurate VAT calculations
- Timely filing
- Error prevention
- Voluntary disclosures
- FTA audits
Conclusion
Filing VAT returns in the UAE without errors requires preparation, accuracy, and knowledge of VAT laws. Businesses must maintain proper records, understand VAT classifications, and follow FTA procedures strictly.
Even small mistakes can result in penalties. A structured approach and professional support ensure compliance, reduce risks, and protect your business from unnecessary financial exposure.
