Table of Contents
- Identify the Stage of the Matter First
- When Is a Voluntary Disclosure Required?
- When Is Reconsideration Appropriate?
- Voluntary Disclosure vs Reconsideration: Which Applies?
- What If the FTA Has Issued a Tax Assessment?
- What is the Potential Penalty for Incorrect Tax Filing Exposure
- Documents That Need To Be Prepared Before Filing
- Immediate Steps to Take After Discovering an Error
- How HHS Lawyers Can Assist You
A filed Corporate Tax return in the UAE that turns out to contain an error simply puts a business in a position where the next decision carries real consequences. The procedure that follows is not a matter of preference; instead, it is determined by where the error came from and whether the FTA has already acted on it.
In order to correct such a mistake, the return of the company follows only one path, and going on to challenge what the FTA has decided follows an entirely different route. Using the procedure that is wrong does not put a pause to the clock on the correct one. What it does is that it burns through the deadline that actually mattered while the wrong process runs its course.
Companies that deal with an incorrect return or an adverse FTA decision should simply obtain advice from experienced tax dispute lawyers in the UAE before they even file anything.
Identify the Stage of the Matter First
Before any corrective step is even taken, the company will actually need to establish exactly where the matter currently stands:
- Is the return still in draft and not yet submitted?
- Has it been filed but still within the filing window?
- Has the deadline passed and an error surfaced afterward?
- Has the FTA responded with an assessment or administrative penalty?
- Is there an official FTA decision that the company wants to dispute?
Each answer leads somewhere different, and it is best to establish which situation even applies before any sort of action is taken, as that is what prevents a procedural mistake from compounding the original problem.
An unfiled return has to get corrected before submission. A return that has been recently filed may still be adjustable through the return process. Any sort of post-deadline error with no FTA involvement typically will require a voluntary disclosure. An FTA decision that the company strongly believes is wrong requires reconsideration.
A review of the Corporate Tax position and supporting calculations for the company in question can actually help to identify whether the problem is even clerical, technical or legal.
Need Tax Dispute Help?
Dubai's Expert Advice at Your Fingertips.
When Is a Voluntary Disclosure Required?
Federal Decree-Law No. 28 of 2022 on Tax Procedures places a legal obligation on all taxable persons to file a voluntary disclosure when a submitted return or FTA tax assessment contains an error that produced a lower tax liability than the law requires. The same obligation tends to apply where an incorrect refund claim has produced a higher refund than was actually due.
Common situations that can bring this obligation into play:
- Income that is left out of the taxable base entirely
- Expenses claimed that do not qualify for deduction.
- Loss figures inflated beyond what the records support.
- Related-party transactions where required adjustments were skipped
- A relief claimed without meeting the applicable conditions
- AA Free Zone Person that applied Qualifying Free Zone Person status without meeting the required conditions
Where the original return overstated the tax liability rather than understating it, a voluntary disclosure can be submitted but is not compulsory in the way it is when tax was underpaid. Errors with no tax impact can still require correction through the method that the FTA prescribes.
A voluntary disclosure needs to be able to explain the error clearly, show the difference that exists between what was filed and what should have been filed, and reconcile that discrepancy with the financial statements and tax computation.
Where the same error has implications for another period or relief, those connections actually belong in the same submission rather than a separate one that is filed later, as it all forms a part of the Corporate Tax planning strategy.
When Is Reconsideration Appropriate?
Reconsideration exists to challenge something that the FTA has decided, not to fix something the company got wrong in its own return. That distinction carries the real procedural weight.
Under Federal Decree-Law No. 28 of 2022 on Tax Procedures, reconsideration grounds typically arise where the position of the company is that the FTA:
- Read the Corporate Tax Law in a way that does not fit the facts of the case.
- Reached conclusions about a transaction that the available evidence does not support
- Used a flawed methodology to calculate the assessment figure
- Refused a deduction or expense without legal justification
- Imposed a penalty that the law does not actually authorise
What the request must contain:
- Identification of the specific decision that is being challenged
- The factual and legal grounds for the objection
- Supporting documents that are behind every claim that has been made
The 40-business-day deadline runs from the date of official notification under Federal Decree-Law No. 47 of 2022 on Corporate Tax, and the FTA has up to 40 business days to respond, with the possibility of extension. Any sort of response to general queries, complaint acknowledgements, and clarification emails is not an official decision and cannot be reconsidered.
Our guide to tax dispute resolution mechanisms in the UAE explains the wider escalation process.
Voluntary Disclosure vs Reconsideration: Which Applies?
| Situation | Likely Procedure |
|---|---|
| Error that is found in the filed return of the company | Voluntary disclosure or applicable correction process |
| Error that caused tax to be understated | Voluntary disclosure is generally required |
| Error that caused tax to be overstated | Voluntary disclosure may be submitted |
| FTA issued a decision or penalty that the company disputes | Reconsideration |
| FTA issued an assessment following an audit | Tax assessment review or reconsideration |
The substance of what happened actually determines which column will even apply, not which procedure seems faster or more convenient. A correction mechanism cannot stand in for reconsideration where an official decision is being challenged. In the same way, a reconsideration cannot substitute for a voluntary disclosure where the return of a company is what needs fixing.
What If the FTA Has Issued a Tax Assessment?
A tax assessment that is issued after an FTA audit opens an additional option: a tax assessment review. This option tends to sit between doing nothing and filing a full reconsideration request, and it even involves FTA officials who had no involvement in the original audit.
| Assessment is the better fit where: | Reconsideration is the better fit where: |
|---|---|
|
|
The two procedures cannot run at the same time for similar assessments. Only after a review request has been submitted, then the reconsideration must wait for the review decision before it can be filed. If there is any sort of filing that is out of sequence, it creates a procedural conflict that can delay both processes and can close all options that would otherwise have remained open.
This distinction should form part of a wider tax dispute management strategy.
What is the Potential Penalty for Incorrect Tax Filing Exposure
An incorrect Corporate Tax return usually carries an AED 500 administrative penalty under Cabinet Decision No. 75 of 2023 on Administrative Penalties. The only exception is unless the specific error is corrected before the exact filing deadline expires.
Once a voluntary disclosure identifies that there is an unpaid tax, additional penalties can actually run from the original due date to the period that the disclosure is submitted, calculated against the tax difference.
The position shifts significantly if a disclosure that should have been filed was not made before the FTA issued an audit notification. At that point, the company tends to lose control of the timing, and the penalties will reflect that. Whatever corrected position the company will want to adopt still needs to be legally sound and supported by records that can withstand scrutiny.
Documents That Need To Be Prepared Before Filing
| Return and computation records |
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| Supporting schedules |
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| Transaction evidence |
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| FTA correspondence and reconciliation |
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Further guidance is available in our article on tax controversy and dispute resolution in the UAE.
Immediate Steps to Take After Discovering an Error
- Work out whether the error increases the tax liability, reduces it, or leaves it unchanged.
- Confirm whether the filing deadline has already passed.
- Check whether an FTA audit notice, assessment, or penalty has already been issued.
- Calculate every applicable deadline from the date of official FTA notification.
- Determine which procedure fits the specific situation —voluntary disclosure, assessment review, or reconsideration
- Prepare a reconciled explanation and arrange payment for any additional tax that is due.
Cross-border matters tend to require separate analysis where the correction affects transfer pricing positions, related-party arrangements, or treaty-based treatments.
Our guide to international tax disputes in the UAE addresses those risks.
Need Tax Dispute Help?
Dubai's Expert Advice at Your Fingertips.
How HHS Lawyers Can Assist You
At HHS Lawyers, we review the original return, identify what the nature and tax impact of the error is, and advise on which procedure will apply given where the matter currently stands.
Where a voluntary disclosure is actually required, our experts at HHS Lawyers prepare the submission and address any related periods or elections that are affected by the same error. In other instances that an FTA decision is being challenged, the team also prepares the reconsideration request, advises on an assessment review, and represents businesses in TDRC proceedings and eligible court challenges where the matter can really escalate further.
Businesses that have filed an incorrect return or received an adverse FTA decision should consult Corporate Tax dispute lawyers before the applicable deadline closes.
This article provides general information only and does not constitute legal or tax advice. The correct procedure depends on the return, the tax impact, FTA communications, applicable deadlines, and the evidence available.
