The costliest VAT errors made by UAE businesses

Years into UAE VAT implementation, critical mistakes continue to surface—leading to FTA’s audits and assessments, penalties, and financial setbacks. These advisory highlights the most common and costly errors businesses must avoid.

Even after more than six years since the introduction of VAT in the UAE, many businesses—large and small—are still unknowingly making costly mistakes in their VAT processes. These compliance gaps not only expose businesses to FTA audits but also result in hefty administrative penalties and reputational risks.

Businesses frequently apply zero-rating on exports without meeting the strict conditions outlined by the FTA. Common issues include:

• Absence of proper shipping/delivery documentation
• Misclassification of local sales as exports
• Errors in timeframes for export evidence submission

Incorrect Claims on Input Tax Invoices

Improper recovery of input tax is a persistent issue. Errors include:

• Claiming VAT on non-business or blocked expenses
• Using invoices addressed to another entity
• Late claims – outside the 6-month window

Improper Tax Invoice Formats & Documentation Gaps

Failing to issue valid tax invoices is a common compliance risk. Issues often include:

• Missing mandatory fields (e.g., TRN, VAT amount, supply date)
• Manual invoices lacking serial numbers
• Incomplete supporting documents during audits

WHAT’S AT STAKE?

Non-compliance leads to penalties, delayed refunds, and reputational damage. Proactively identifying and rectifying these issues can significantly reduce audit risks and improve financial efficiency.

HOW CROWE UAE CAN HELP:

Our VAT health check and advisory services are designed to spot these errors early and strengthen your compliance framework. Let’s ensure you stay on the right side of the FTA.