UAE Tax Penalties & Waivers
Complete penalty framework under Cabinet Decision No. 129 of 2025, effective 14 April 2026.
Penalty framework changed April 14, 2026
Voluntary disclosure simplified to 1%/month (was 5-40% tiered). Corporate tax late filing clarified. E-invoicing penalties added. Old guidance is outdated.
VAT Penalties
Late VAT return filing (first time)
AED 1,000
Source: Cabinet Decision No. 129 of 2025
Late VAT return filing (repeat within 24 months)
AED 2,000
Source: Cabinet Decision No. 129 of 2025
Late VAT payment — immediate
2% of unpaid tax
Source: Cabinet Decision No. 129 of 2025
Late VAT payment — after 7 days
Additional 4% + 1% per day (max 300%)
Source: Cabinet Decision No. 129 of 2025
Corporate Tax Penalties
Late registration
AED 10,000 — waiver available if first return filed within 7 months
Source: FTA Penalty Waiver
Late corporate tax filing (months 1-12)
AED 500/month
Source: Cabinet Decision No. 129 of 2025
Late corporate tax filing (month 13+)
AED 1,000/month
Source: Cabinet Decision No. 129 of 2025
Voluntary Disclosure
CHANGED APR 2026Before audit notice
1% of tax difference per month from original due date. Simplified from old 5-40% tiered system.
Source: Cabinet Decision No. 129 of 2025
After audit notice
15% fixed + 1% per month
Source: Cabinet Decision No. 129 of 2025
Other Penalties
E-invoicing non-compliance
AED 5,000/month (recurring)
Source: Cabinet Decision No. 129 of 2025
Failure to keep records
AED 10,000 (first), AED 20,000 (repeat)
Source: Tax Procedures Law
Incorrect tax invoice
AED 5,000 per invoice
Source: Tax Procedures Law
Tax evasion
Criminal prosecution + 300% of evaded tax
Source: Federal Decree-Law No. 7 of 2017, Article 26
Last verified: 1 May 2026
Sources: Cabinet Decision No. 129/2025, Federal Decree-Law No. 7/2017 (Tax Procedures). Always check tax.gov.ae.