VAT Filing in Abu Dhabi

The first late filing incurs a penalty of AED 1,000. Subsequent late filings within 24 months incur AED 2,000 each. Additionally, late payment of VAT attracts a 2% penalty on the unpaid amount immediately, plus 4% on the 7th day, and 1% daily thereafter (capped at 300% of the tax due).

No. Certain expenses are blocked from input tax recovery, including entertainment expenses for non-employees, personal-use motor vehicles, and goods or services not used for making taxable supplies. Employee entertainment is 50% recoverable. Always ensure claims are supported by valid FTA-compliant tax invoices.

If the error results in a tax difference exceeding AED 10,000, you must file a voluntary disclosure through EmaraTax. For errors below AED 10,000, you can adjust the figures in the next VAT return. Filing a voluntary disclosure before the FTA discovers the error demonstrates good faith and may reduce penalties.

ADGM firms providing a mix of taxable and exempt financial services must apportion input VAT. Only VAT attributable to taxable supplies is recoverable. Common methods include turnover-based apportionment, with special methods available for approval by the FTA. We implement the most beneficial apportionment method for ADGM clients.

VAT on government contracts is charged on progress billings at 5%. Output VAT is accounted for when the invoice is issued (or payment received, whichever is earlier). Retentions held by the government client do not defer the VAT obligation. We ensure Abu Dhabi government contractors correctly time their VAT on project milestones.

If you overpaid VAT on a return (e.g., under-claimed input tax), you can correct this on a subsequent return or submit a voluntary disclosure. Refund claims for excess input tax are submitted through EmaraTax. We handle VAT refund applications and voluntary disclosures for Abu Dhabi businesses.