Amends the definitions in Article 1 and replaces Tables 1 and 3 of the tax penalties decision, restating the penalties for tax procedures and VAT violations with effect from 14 April 2026; the FTA publishes it within the consolidated text of Cabinet Decision No. 40 of 2017.
Cabinet Decision No. 129 of 2025 rewrites the administrative penalties for breaches of the Tax Procedures Law and the VAT Law. It amends Cabinet Decision No. 40 of 2017, the general tax penalties decision, by changing the definitions in Article 1 and replacing Table 1 (Tax Procedures Law violations) and Table 3 (VAT violations). It was issued on 9 October 2025 and takes effect from 14 April 2026. The Federal Tax Authority publishes it only within the consolidated text of Decision No. 40 of 2017, whose header records the issue and effective dates and whose footnotes mark the amended tables; Table 2 on excise tax violations is unchanged and still carries the 2021 amendment marks. It is in force.
Table 1, as replaced, sets the penalties under the Tax Procedures Law. Failure to keep the required records costs AED 10,000, or AED 20,000 for a repeat within 24 months. Failure to produce records in Arabic on request costs AED 5,000. A late registration application costs AED 10,000. A late deregistration application costs AED 1,000 plus AED 1,000 for each further month, capped at AED 10,000. Failure to notify changes to tax record information costs AED 1,000, or AED 5,000 on repetition within 24 months. A legal representative who fails to notify its appointment, or fails to file a return, pays AED 1,000, rising to AED 2,000 for a repeated return failure, from its own funds. A late tax return costs AED 1,000 for the first offence and AED 2,000 within 24 months. Late payment of tax, and failure to account for tax on behalf of another person, carry a monthly penalty of 14% per annum on the unpaid amount from the day after the due date, with voluntary disclosures and assessments due 20 business days after submission or receipt. An incorrect return costs AED 500 unless corrected by the deadline or disclosed with no tax difference. A voluntary disclosure of an error attracts 1% of the tax difference per month from the return's due date; where no disclosure is made before an audit notice, a fixed 15% of the difference applies plus 1% per month. Failure to facilitate an audit costs AED 20,000, and failure to calculate tax on imported goods 50% of the tax.
Table 3, as replaced, sets the VAT penalties: AED 5,000 for failing to display tax-inclusive prices, AED 2,500 for failing to notify the Authority of applying the margin scheme, the higher of AED 50,000 or 50% of the tax for breaching designated zone conditions, and AED 2,500 per detected case for failing to issue a tax invoice or credit note on time or for not meeting the conditions for issuing them electronically.
The Decision does not alter the Corporate Tax penalties, which sit in Cabinet Decision No. 75 of 2023, nor the e-invoicing penalties in Cabinet Decision No. 106 of 2025.
Every taxable person, registrant, legal representative and tax agent subject to the Tax Procedures Law and the VAT Law in the UAE, including businesses in free zones and designated zones, in respect of violations penalised from 14 April 2026. Excise tax penalties in Table 2 and corporate tax penalties under Cabinet Decision No. 75 of 2023 are not affected.
| Article 1 | Amends the definitions in Cabinet Decision No. 40 of 2017, the only article of that decision footnoted as changed by Decision No. 129 of 2025. |
| Table 1, items 1–2 | Failure to keep the records required by the tax laws costs AED 10,000, or AED 20,000 for a repeat within 24 months; failure to submit tax data, records or documents in Arabic when requested costs AED 5,000. |
| Table 1, items 3–5 | A late registration application costs AED 10,000; a late deregistration application AED 1,000 plus AED 1,000 per month capped at AED 10,000; failure to report changes to tax record information AED 1,000, or AED 5,000 for a repeat within 24 months. |
| Table 1, items 6–8 | A legal representative who fails to notify its appointment pays AED 1,000, and one who fails to file a return pays AED 1,000 or AED 2,000 on repetition, from its own funds; a registrant's late tax return costs AED 1,000 for the first offence and AED 2,000 within 24 months. |
| Table 1, item 9 | Late payment of tax carries a monthly penalty at 14% per annum on the unpaid amount for each month or part of a month from the day after the due date; for voluntary disclosures and assessments the due date is 20 business days from submission or receipt. |
| Table 1, items 10–12 | An incorrect return costs AED 500 unless corrected by the deadline or disclosed with no tax difference; a voluntary disclosure attracts 1% of the tax difference per month from the return's due date; with no disclosure before an audit notice a fixed 15% of the difference applies plus 1% per month. |
| Table 1, items 13–15 | Failure to facilitate a tax audit costs AED 20,000 from the person's own funds; failure to calculate tax on behalf of another person carries the 14% per annum monthly penalty; failure to calculate tax due on imported goods costs 50% of the unpaid or undeclared tax. |
| Table 3, items 1–3 | AED 5,000 for failing to display tax-inclusive prices, AED 2,500 for failing to notify the Authority of applying the profit margin scheme, and the higher of AED 50,000 or 50% of the tax chargeable for breaching the conditions for goods in a designated zone. |
| Table 3, items 4–6 | AED 2,500 per detected case for failing to issue a tax invoice or alternative document on time, for failing to issue a tax credit note on time, and for failing to meet the conditions for issuing invoices and credit notes electronically. |
The Decision is itself the penalty schedule: fixed amounts from AED 500 to AED 20,000 for procedural failures, AED 10,000 for late registration, a monthly penalty of 14% per annum on late-paid tax, 1% per month of the tax difference on voluntary disclosures with a further fixed 15% where no disclosure precedes an audit notice, 50% of tax on undeclared imports, and VAT-specific amounts of AED 2,500 to AED 5,000 per violation or the higher of AED 50,000 and 50% of the tax for designated zone breaches.
From April 2026 every FTA penalty notice our clients receive is checked against these tables rather than the 2017 and 2021 figures. The two amounts that matter most in our tax filing work are the AED 10,000 late registration penalty, which is why we register new companies for VAT as soon as the threshold is in sight, and the late-payment rate of 14% per annum charged monthly, which turns a missed quarterly payment into a real cost within weeks. We encourage clients to use voluntary disclosure early, because the gap between 1% per month and the additional fixed 15% after an audit notice is the largest single lever in the table. For trading clients using designated zones we review the storage and movement controls, since the penalty there is the higher of AED 50,000 and half the tax. We also confirm that the client's accounting system can produce records in Arabic on request.
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