Radical Changes in UAE Tax Administrative Penalties

Radical Changes in UAE Tax Administrative Penalties

by | Nov 12, 2025

The Cabinet Decision No. 129 of 2025 (‘the New Decision’) introduces a comprehensive and business-friendly overhaul of the UAE’s administrative penalties for the Tax Laws. Effective 14 April 2026, the new decision introduces significant changes to the financial penalties for various common tax violations and simplifies the calculation methods for late payments and voluntary disclosures.

We have summarized a comparative analysis of key penalties under the New Decision vis-a-vis penalties levied under the erstwhile Cabinet Decision No. 108 of 2021 (‘the Old Decision’).

Violation Description Administrative Penalties (under the Old Decision) Administrative Penalties (under the New Decision)
Failure to keep required records
  • AED 10,000 (first time)
  • AED 20,000 (repetition)
  • AED 1,000 per violation
  • AED 20,000 (if repeated within 24 months)
Failure to submit data in Arabic
  • AED 20,000
  • AED 5,000
Failure to update tax record information
  • AED 5,000 (first time)
  • AED 10,000 (repetition)
  • AED 1,000 per violation
  • AED 5,000 (if repeated within 24 months)
Legal representative failure to notify appointment
  • AED 10,000
  • AED 1,000
Late payment of Payable Tax
  • 2% immediately due, plus
  • 4% monthly penalty (up to a maximum of 300%)
  • 14% per annum calculated monthly on the unpaid amount
Submitting an incorrect Tax Return
  • Fixed penalty of AED 1,000 (first time) / AED 2,000 (repetition)
  • If tax difference is lower, penalty equals the difference (min. AED 500)
  • Fixed AED 500 if there is any tax due, otherwise
  • ‘Nil’ if the error is corrected by the deadline or via a Voluntary Disclosure that results in no tax difference
Submitting a Voluntary Disclosure
  • Starting from 5% to 40% based on years elapsed since the due date
  • 1% monthly penalty on the Tax Difference, from the due date until the disclosure date
Failure to submit a Voluntary Disclosure before a Tax Audit
  • 50% of the error amount, plus
  • 4% monthly penalty on the unpaid tax
  • 15% fixed penalty on the Tax Difference, plus
  • 1% monthly penalty on the Tax Difference
Failure to calculate tax on behalf of another
  • 2% immediately due, plus
  • 4% monthly penalty (up to a maximum of 300%)
  • 14% per annum calculated monthly on the unpaid amount

Click to download a copy of the Cabinet Decision

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