The UAE Administrative Penalty Framework 2025 introduces significant changes to the tax compliance landscape. On 9 October 2025, the UAE Cabinet issued Cabinet Decision No. 129 of 2025, amending Cabinet Decision No. 40 of 2017 on administrative penalties for violations of tax laws.
Effective from 14 April 2026, the revised framework replaces the penalty regime introduced under Cabinet Decisions Nos. 49 and 108 of 2021 and aligns the administrative penalties with Federal Decree-Law No. 28 of 2022 on Tax Procedures.
These amendments represent a fundamental shift in the UAE’s approach to tax compliance. The revised framework moves away from a punitive, compounding penalty model toward a more proportionate, transparent, and compliance-driven system. It aims to enhance clarity, encourage voluntary disclosures, and reduce disproportionate penalties arising from minor or unintentional non-compliance.
Administrative Penalties – Key Changes (Old vs New Framework)
Failure to Maintain Proper Records and Supporting Documentation
Old Penalty: AED 10,000 (first); AED 20,000 (repeat)
New Penalty: AED 10,000 per violation; AED 20,000 if repeated within 24 months
Failure to Submit Requested Records and Documents in Arabic
Old Penalty: AED 20,000
New Penalty: AED 5,000
Failure to Submit Tax Registration Application Within Prescribed Timeline
Old Penalty: AED 10,000
New Penalty: AED 10,000
Failure to Submit Tax Deregistration Application Within Prescribed Timeline
Old Penalty: AED 1,000 monthly (max AED 10,000)
New Penalty: AED 1,000 monthly (max AED 10,000)
Failure to Notify the FTA of Changes to Taxable Person’s Records
Old Penalty: AED 5,000 (first); AED 10,000 (repeat)
New Penalty: AED 1,000 per violation; AED 5,000 if repeated within 24 months
Failure of Legal Representative to Notify Appointment to the FTA
Old Penalty: AED 10,000
New Penalty: AED 1,000
Failure of Legal Representative to Submit Tax Return Within Deadline
Old Penalty: AED 1,000 (first); AED 2,000 if repeated within 24 months.
New Penalty: AED 1,000 (first); AED 2,000 if repeated within 24 months.
Failure of Registrant to Submit Tax Return Within Deadline
Old Penalty: AED 1,000 (first); AED 2,000 if repeated within 24 months.
New Penalty: AED 1,000 (first); AED 2,000 if repeated within 24 months.
Failure to Settle Payable Tax Within Prescribed Timeline
Old Penalty: 2% immediately + 4% monthly (up to 300%)
New Penalty: 14% annually (approx. 1.167% monthly)
Submission of Incorrect Tax Return or Reporting Errors
Old Penalty: AED 1,000 (first); AED 2,000 (repeat); min AED 500
New Penalty: AED 500 (waived if corrected early)
Submission of Voluntary Disclosure to Correct Tax Errors
Old Penalty: 5%–40% (tiered based on delay)
New Penalty: 1% monthly on tax difference
Failure to Submit Voluntary Disclosure Before Tax Audit Notification
Old Penalty: 50% + 4% monthly
New Penalty: 15% + 1% monthly
Failure to Cooperate or Facilitate the Tax Audit Process
Old Penalty: AED 20,000
New Penalty: AED 20,000
Failure to Calculate and Account for Tax on Behalf of Another Person
Old Penalty: 2% + 4% monthly (max 300%)
New Penalty: 14% annually
Failure to Account for Tax Due on Imports
Old Penalty: 50% of unpaid tax
New Penalty: 50% of unpaid tax
Excise Tax: Failure to Display Prices Inclusive of Tax
Old Penalty: AED 5,000
New Penalty: AED 5,000
Excise Tax: Non-Compliance with Designated Zone Transfer Procedures
Old Penalty: Higher of AED 50,000 or 50% of tax
New Penalty: Higher of AED 50,000 or 50% of tax
Excise Tax: Failure to Provide Price Lists for Excise Goods
Old Penalty: AED 5,000 (first); AED 10,000 (repeat)
New Penalty: AED 5,000 (first); AED 10,000 (repeat)
VAT: Failure to Display Prices Inclusive of Tax
Old Penalty: AED 5,000
New Penalty: AED 5,000
VAT: Failure to Notify Application of Margin Scheme
Old Penalty: AED 2,500
New Penalty: AED 2,500
VAT: Non-Compliance with Designated Zone Requirements
Old Penalty: Higher of AED 50,000 or 50% of tax
New Penalty: Higher of AED 50,000 or 50% of tax
VAT: Failure to Issue Tax Invoice for Taxable Supply
Old Penalty: AED 2,500 per case
New Penalty: AED 2,500 per case
VAT: Failure to Issue Tax Credit Note Where Required
Old Penalty: AED 2,500 per case
New Penalty: AED 2,500 per case
VAT: Non-Compliance with E-Invoicing and Credit Note Requirements
Old Penalty: AED 2,500 per case
New Penalty: AED 2,500 per case
Key Takeaway for Businesses
Cabinet Decision No. 129 highlights the UAE’s strict approach towards tax compliance. Even minor delays or administrative oversights can result in significant penalties.
Businesses should:
- Review internal tax processes and controls
- Ensure accurate and timely filings
- Maintain proper documentation
- Monitor deadlines for disclosures and payments
For full details, refer to the official FTA publication here
How Masar Can Help
At Masar Chartered Accountants, we support businesses in navigating UAE tax regulations with confidence. From compliance reviews to penalty risk assessments, our team ensures your business remains aligned with the latest legal requirements.
📩 info@masaraudit.ae
📞 +971 56 442 2333
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