The UAE has amended its provisions relating to administrative penalties through Cabinet Decision No. 129 of 2025. This decision replaces Cabinet Decision No. 108 of 2021 and brings the penalty framework in line with the current Tax Procedures Law. The revised provisions will be effective from 14 April 2026, giving businesses sufficient time to review and update their compliance processes accordingly.
The penalties have been reduced to simplify the tax regime and encourage businesses to comply with the laws. Below is a grouped list of the new administrative penalties.
Details of Administrative Penalties:
- Payment and Calculation-Related Penalties
- Late payment of VAT: Monthly penalty at 14% p.a. for each completed month on the unsettled amount.
- Non-calculation of taxes where the registrant is obligated to compute tax on behalf of another person: Monthly penalty at 14% p.a. for each completed month on the unsettled amount.
- Non-calculation of tax on import of goods: 50% of the undeclared or unpaid tax.
- VAT Return Filing and Accuracy
- Late filing of VAT returns: AED 1,000 for the first offence; AED 2,000 in each case of repetition within 24 months.
- Filing of incorrect VAT returns: AED 500 penalty, applicable only if there is an error
- Voluntary Disclosure-Related Penalties
- Voluntary disclosure of VAT errors: 1% of the tax difference for each month, calculated from the day following the due date until the date of submission of the voluntary disclosure.
- Non-submission of voluntary disclosure before being notified by the tax authorities: Fixed penalty of 15% of the tax difference OR 1% penalty per month, calculated from the day following the due date until the date of submission of the voluntary disclosure.
Businesses should also familiarize themselves with understanding penalties under UAE tax laws to avoid financial exposure arising from non-compliance.
- VAT Invoicing and Documentation Violations:
- Failure to display prices inclusive of VAT: AED 5,000.
- Failure to notify the FTA when applying the Margin Scheme: AED 2,500.
- Failure to comply with designated zone conditions: Higher of AED 50,000 or 50% of the unpaid tax.
- Failure to issue a tax invoice within the period legally specified (14-day rule): AED 2,500 per case.
- Failure to issue a tax credit note within the period legally specified (14-day rule): AED 2,500 per case.
- Failure to issue a tax invoice or tax credit note electronically: AED 2,500 per case.
- Registration, De-registration, and Amendments
- Non-submission of VAT registration application within the stipulated time period: AED 10,000.
- Non-submission of VAT de-registration application within the stipulated time period: AED 1,000 per month and on same date monthly, up to a maximum of AED 10,000.
- Non-submission of amendment of information with the FTA: AED 1,000 for the first offence; AED 5,000 in each case of repetition within 24 months.
Many penalties arise due to procedural lapses, and addressing common VAT compliance mistakes businesses should avoid can significantly reduce the risk of fines and enforcement actions.
- Record Keeping and Administrative Compliance
- Failure to submit records in Arabic: AED 5,000.
- Failure to keep required records and other information, who is obligated under Tax Procedure Law or Tax Law: AED 10,000 for each violation; AED 20,000 in each case of repeated violation within 24 months from first violation.
- Legal Representative-Related Penalties (from his own funds)
- Non-submission of appointment of a legal representative: AED 1,000.
- Non-submission of tax returns by the legal representative: AED 1,000 for the first offence; AED 2,000 in each case of repetition within 24 months.
- Audit-Related Penalties
- Failure to provide facilitation to the tax auditor: AED 20,000.
With the recent amendments and growing complexities in the VAT law, businesses need to be more cautious and vigilant. An expert consulting firm can help you save time and add real value to your business. At BCL Globiz, we understand the complexities of your operations and are committed to providing transparent solutions suited to your business model.
Connect with our experts at punith@bcl.ae.
