UAE reduces administrative penalties imposed for violations

The Federal Tax Authority (FTA) has announced the entry into force of Cabinet Decision No.(129) of 2025 amending certain provisions of Cabinet Decision No.(40) of 2017 on administrative penalties imposed for violations of tax laws in the UAE, following its effective date on Tuesday (April 14, 2026.)

The FTA said the amendments aim to support taxpayers, reduce their financial burden and help them comply with tax obligations while regularising their positions. The move is also intended to enhance the UAE’s competitiveness and ease of doing business.

The authority added that the changes introduce further facilitations for entities registered for Value Added Tax (VAT) and Excise Tax, encouraging voluntary compliance, timely updates of tax records and correction of errors.

MANY TYPES OF ADMINISTRATIVE PENALTIES

The FTA indicated that, pursuant to the new Decision amending certain provisions of the Cabinet Decision on administrative penalties imposed for violations of tax laws, many types of administrative penalties have either been reduced or had their calculation mechanisms amended.

The reductions cover numerous administrative violations related to the application of the Federal Decree-Law on Tax Procedures, the Federal Decree-Law on Excise Tax, and the Federal Decree-Law on Value Added Tax.

The authority explained that, under the amendments, the administrative penalty for the failure to submit data, records and tax-related documents in Arabic to the authority when requested has been reduced from Dhs20,000 to Dhs5,000.

The penalty for a registrant’s failure to notify the authority of any case that may require amendment of the information pertaining to its tax record has been reduced from Dhs5,000 for the first instance and Dhs10,000 in the case of repetition, to the imposition of one of two penalties: Dhs1,000 for each violation, and Dhs5,000 in the event of repetition of the same violation within 24 months from the date of the last violation.

In addition, the penalty for a legal representative of a taxable person failing to notify the authority of his appointment within the prescribed time limits has been reduced from Dhs10,000 previously to Dhs1,000, provided that the penalties shall be payable from the legal representative’s own funds.

Abdulaziz Mohammed Al Mulla, FTA Director-General, said the amendments include reductions in several administrative penalties and align with the leadership’s directives to implement a tax system based on international best practices.

He said the measures are designed to support economic growth, enhance transparency and ensure a flexible legislative framework that keeps pace with evolving requirements.

Al Mulla urged tax registrants to take advantage of the revised provisions to correct violations and benefit from reduced penalties, enabling businesses to strengthen their role in supporting the UAE’s position as a global financial and economic hub.

The Director-General continued, "The amendments support taxable persons in achieving voluntary compliance and rectifying their positions where violations exist. They also encourage registrants to notify the authority of any cases that may require amendments to the information contained in their tax records and further encourage the prompt submission of voluntary disclosures, where required, without exposure to significant financial penalties.”

The FTA also noted that the amendments extend to administrative penalties relating to the following violations: failure by a taxable person to pay the payable tax within the time limits specified in the tax law; submission by a registrant of an incorrect tax return; submission by a taxable person or payer of tax of a voluntary disclosure in relation to errors in a tax return, tax assessment, or tax refund application; failure by a taxable person or payer of tax to submit a voluntary disclosure in respect of an error in a tax return, tax assessment, or tax refund application before being notified by the authority of a tax audit; failure by a registrant to account for tax on behalf of another person where the registrant is required to do so under the tax law.

WAM