UAE Tax Penalties, Voluntary Disclosure and Appeals in 2026: Tax Assessment Review, Reconsideration, the TDRC and the Courts

A dispute with the UAE Federal Tax Authority runs through four consecutive stages set by Federal Decree-Law No. 28 of 2022 on Tax Procedures: an application for Tax Assessment Review under Article 28, an application for Reconsideration under Article 29, an objection to the Tax Disputes Resolution Committee under Articles 30 to 33, and an appeal to the competent court under Article 36. Skipping a stage closes the next one: a court will not admit a tax claim where no objection was first filed with the Committee.

⚠ A new penalty scale has applied since 14 April 2026. Cabinet Decision No. 129 of 2025, issued on 9 October 2025, amended Cabinet Decision No. 40 of 2017: the late payment penalty became 14% per annum accruing monthly instead of 2% plus 4% per month; the Voluntary Disclosure penalty became 1% per month on the tax difference instead of the former tiered 5% to 40% scale; and the penalty for failing to disclose before an audit notification fell from 50% plus 4% monthly to 15% plus 1% monthly. Any guidance quoting the older figures describes a regime that no longer applies.

The legal framework in force in 2026

Instrument	Issued / effective	Scope
Federal Decree-Law No. 28 of 2022	Issued 30 September 2022, in force 1 March 2023	Tax procedures: audits, assessments, disclosure, appeals, limitation periods
Federal Decree-Law No. 17 of 2025	Amended Law No. 28 of 2022; consolidated text published December 2025	Refund of credit balances and limitation periods
Cabinet Decision No. 40 of 2017	Issued 24 September 2017, effective the same date	Administrative penalties under the Tax Procedures, Excise and VAT Laws
Cabinet Decision No. 49 of 2021	Issued 28 April 2021, effective 28 June 2021	The first major reform of the penalty scale
Cabinet Decision No. 108 of 2021	Issued 30 December 2021, effective 1 January 2022	Targeted amendments to the scale
Cabinet Decision No. 129 of 2025	Issued 9 October 2025, effective 14 April 2026	The current wording of Tables 1 and 3: late payment, disclosure, incorrect returns
Cabinet Decision No. 74 of 2023	Executive Regulation of the Tax Procedures Law	Procedural detail, including extensions of review periods
Cabinet Decision No. 75 of 2023 (as amended by Cabinet Decision No. 10 of 2024)	Effective 1 August 2023; amendments from 1 March 2024	A separate penalty scale for corporate tax

⚠ The distinction most often blurred. Cabinet Decision No. 40 of 2017, as amended, governs penalties under the Tax Procedures, Excise and VAT Laws. Corporate tax penalties sit in a separate instrument — Cabinet Decision No. 75 of 2023. Cabinet Decision No. 129 of 2025 does not touch corporate tax: its scope is confined to the Tax Procedures Law, the Excise Tax Law and the VAT Law.

What changed on 14 April 2026

The reform replaced a layered calculation with a single percentage model. Below are the positions that changed.

Violation	Before 14 April 2026	From 14 April 2026
Failure to submit documents in Arabic	AED 20,000	AED 5,000
Failure to notify changes to tax record details	AED 5,000, AED 10,000 on repeat	AED 1,000, AED 5,000 on repeat
Late payment of tax	2% immediately plus 4% monthly	14% per annum accruing monthly
Incorrect tax return	AED 1,000	AED 500 unless corrected in time
Submitting a Voluntary Disclosure	Tiered scale from 5% to 40%	1% per month on the tax difference
Failure to disclose before an audit notification	50% plus 4% monthly	15% fixed plus 1% per month

Cabinet Decision No. 129 of 2025 was issued on 9 October 2025 and takes effect on 14 April 2026 — more than six months between issuance and application.

The economic effect is uneven. On late payment and on failure to disclose the new scale is materially softer: a late payment of AED 100,000 over eight months cost roughly 30% of the amount under the old construction and about 9.3% under the new one. On Voluntary Disclosure itself the effect runs the other way: on a difference of AED 200,000 disclosed after 18 months, the old fixed 10% tier gave AED 20,000 while the new 1% monthly model gives AED 36,000. Those figures come from an international advisory firm's analysis and illustrate the mechanics rather than stating a rule.

⚠ The practical consequence of the model change is that the cost of delay is now linear and grows every month. Under the old tiers there was value in sitting inside a bracket; under the new model each additional month costs exactly 1% of the tax difference. Early detection of an error now converts directly into money.

The current tax procedures penalty scale

Table 1 appended to Cabinet Decision No. 40 of 2017, as amended by Cabinet Decision No. 129 of 2025, contains fifteen violations. The principal ones are below.

Violation	Penalty
Failure to keep the required records and information	AED 10,000 for each violation; AED 20,000 on repeat within 24 months
Failure to submit data and documents in Arabic on request	AED 5,000
Failure to file a tax registration application in time	AED 10,000
Failure to file a deregistration application in time	AED 1,000 on late submission and monthly thereafter, up to AED 10,000
Failure to notify the Authority of circumstances requiring amendment of the tax record	AED 1,000; AED 5,000 on repeat within 24 months
Failure of a legal representative to notify their appointment	AED 1,000, payable from the representative\u2019s own funds
Failure of a registrant to file a tax return in time	AED 1,000 first time; AED 2,000 on repeat within 24 months
Failure to settle payable tax in time	14% per annum for each month or part thereof on the unsettled amount
Submitting an incorrect tax return	AED 500, unless corrected within the filing deadline or a disclosure is filed with no tax difference
Submitting a Voluntary Disclosure on errors in a return, assessment or refund application	1% per month on the tax difference
Failure to submit a Voluntary Disclosure before notification of a tax audit	15% fixed on the tax difference plus 1% per month
Failure to offer facilitation to a tax auditor	AED 20,000, payable from the person\u2019s, representative\u2019s or agent\u2019s own funds
Failure to calculate tax on behalf of another person where required	14% per annum accruing monthly
Failure to calculate tax due on the import of goods	50% of the unpaid or undeclared tax

Late payment: 14% per annum and the twenty-business-day rule

The penalty for failing to settle tax on time is 14% per annum, imposed for each month or part thereof on the unsettled amount, from the day following the due date and on the same date monthly thereafter.

For the purposes of this penalty the due date is: 20 business days from the date of submission in the case of a Voluntary Disclosure, and 20 business days from the date of receipt in the case of a tax assessment.

That rule changes the timing of disclosure work. Filing a Voluntary Disclosure does not trigger the late payment penalty immediately: the taxpayer has twenty business days to settle the additional amount, and only then does the 14% start to run. The same applies after receiving an FTA assessment.

One technical rule introduced by Cabinet Decision No. 49 of 2021 and retained in the current text: where a monthly penalty falls on a date that does not exist in a given month, that date is treated as the first day of the following month, while the original imposition date governs for all other months.

Voluntary Disclosure: when it is mandatory

Article 10 of the Tax Procedures Law separates cases where disclosure is compulsory from cases where it is the taxpayer's option. That distinction determines whether a failure-to-disclose penalty can arise at all.

•     mandatory — where the taxpayer finds that a filed return or an FTA assessment is incorrect such that the payable tax is calculated at less than the correct amount (Article 10(1));

•     mandatory — where a tax refund application is incorrect such that the refund is calculated at more than the correct amount (Article 10(2));

•     optional — where the tax is calculated at more than the correct amount (Article 10(3));

•     optional — where the refund is calculated at less than the correct amount (Article 10(4));

•     special case — where an error or omission is found in a return without any difference in the tax due, it is corrected by a disclosure in the cases determined by the Authority and through a tax return in all other cases (Article 10(5)).

The Voluntary Disclosure penalty applies only to Article 10(1) and (2) cases — disclosures that increase tax or reduce a refund. A disclosure in the taxpayer's favour carries no penalty.

The AED 500 incorrect-return penalty does not apply where the registrant corrects the return within the filing deadline or submits a disclosure that does not produce a difference in the tax due. Preparing and computing a disclosure is work for UPPERSETUP accounting services.

The cost of delay: 1% versus 15% plus 1%

The gap between a voluntary disclosure and a disclosure made after an audit notification is the central fork in the whole design.

Where a disclosure is filed voluntarily, the penalty is 1% per month on the tax difference for each month or part thereof, from the day following the due date of the return or the submission of the refund application until the date the disclosure is filed.

Where no disclosure is filed before notification of a tax audit, two penalties apply together: a fixed 15% on the tax difference plus 1% per month.

How the monthly element runs in the second case depends on what the taxpayer does after the notification. If a disclosure is nonetheless filed after the notification, the monthly penalty runs to the date of that filing. If no disclosure is filed at all, it runs to the date the tax assessment is issued.

⚠ The fixed 15% is the price of a single notification. On a tax difference of AED 1,000,000, disclosing the day before an audit notification rather than the day after is a difference of AED 150,000, all else equal. Error monitoring belongs on the period-close cycle, not the annual one.

The ceiling: no penalty above twice the tax

The Tax Procedures Law contains a general cap that sits above every percentage computation and that commentary rarely mentions.

The amount of any administrative penalty may not exceed twice the amount of tax in respect of which the administrative penalties assessment was issued.

The rule contains the effect of long accrual: on a tax difference of AED 500,000 the aggregate penalty cannot exceed AED 1,000,000, however many months have passed.

⚠ A note on numbering. The published unofficial English translation of Law No. 28 of 2022 contains a numbering error in the assessment chapter: two consecutive articles are labelled 25, and the article on assessment of administrative penalties containing the cap sits immediately before the article on tax crimes. When citing the provision in documents, the article number should be checked against the Arabic original rather than the English translation.

It is separately provided that imposing any administrative penalty does not relieve a person of the obligation to pay the tax itself.

VAT and excise-specific penalties

Alongside the procedural table there are two sector tables — excise and VAT. The VAT table was also updated by Cabinet Decision No. 129 of 2025.

VAT violation	Penalty
Failure to display prices inclusive of tax	AED 5,000
Failure to notify the Authority of applying tax on the margin	AED 2,500
Breach of the conditions for keeping or moving goods in a designated zone	The higher of AED 50,000 or 50% of the tax chargeable on the goods
Failure to issue a tax invoice or alternative document within the period specified	AED 2,500 for each detected case
Failure to issue a tax credit note or alternative document within the period specified	AED 2,500 for each detected case
Failure to comply with the conditions and procedures for issuing tax invoices and credit notes electronically	AED 2,500 for each detected case

The e-invoicing item gains practical weight as the regime expands: the penalty applies per detected case, so it scales with document volume.

The excise table has not changed since the Cabinet Decision No. 49 of 2021 wording and includes, among others, AED 5,000 for failing to display tax-inclusive prices and the higher of AED 50,000 or 50% of the tax for breaching the conditions for moving excise goods between designated zones.

Stage 1: application for Tax Assessment Review

Tax Assessment Review is the first, optional stage under Article 28. It allows the assessment itself to be challenged before the formal reconsideration procedure begins.

A reasoned application for review is submitted within 40 business days from the date the person is notified of the tax assessment and the associated administrative penalties.

The FTA reviews the application and decides within 40 business days of receiving it, notifying the applicant of the decision within 5 business days of issuance.

After the review decision, or on expiry of the period for issuing it, the taxpayer may apply for reconsideration — within 40 business days. The two routes cannot run in parallel: no application for review may be submitted or continued once a reconsideration application has been filed.

Stage 2: Reconsideration

An application for reconsideration under Article 29 may be made in respect of any FTA decision or part of one.

The reasoned application is submitted within 40 business days from the date of notification of the decision. The FTA considers it and issues a reasoned decision within 40 business days of receipt, notifying the applicant within 5 business days.

One constraint matters: where a review application was made in respect of a tax assessment, the reconsideration application may only be filed after the FTA has decided on it or the period for doing so has expired with notice to the applicant.

Payment of the tax is not yet a condition at this stage — that requirement arises at the next one. The reasoned case is therefore best built here, before the payment conditions engage; the legal side is covered by UPPERSETUP legal services.

Stage 3: objection to the TDRC

The Tax Disputes Resolution Committee is a quasi-judicial body constituted outside the FTA.

The Committee is chaired by a member of the judiciary and includes two experts from the Tax Experts Roll, appointed by decision of the Minister of Justice in coordination with the Minister of Finance.

Its competence is to decide objections against FTA decisions on reconsideration applications, and to decide reconsideration applications on which the FTA has taken no decision.

An objection is filed within 40 business days from notification of the FTA decision. The Committee considers it and decides within 20 business days of receipt, notifying the parties within 5 business days.

An objection is not accepted in three cases: where no reconsideration application was first submitted to the FTA; where the full tax subject of the objection has not been paid; and where the forty-day period was missed.

⚠ The admission condition covers tax only, not penalties. To file an objection the full tax in dispute must be paid; paying the administrative penalties is not a condition at this stage. The penalty requirement appears only at the court stage.

The Committee's decision is final where the total of payable tax and administrative penalties specified in it does not exceed AED 100,000.

The Cabinet may, on the Minister's proposal, modify the amount of payable tax required for the purposes of filing an objection.

Stage 4: appeal to the court

The court stage is open to both sides of the dispute and constrained by strict admissibility conditions.

The FTA and the person may appeal the Committee's decision to the competent court within 40 business days of notification — both where they object to the decision in whole or in part and where the Committee has made no decision on an objection duly filed.

The court declares the appeal inadmissible in three cases: where the objection was rejected by the Committee on the Article 32(2) grounds; where the person fails to produce a document proving full payment of the tax; and where the person fails to produce a document proving payment of at least 50% of the administrative penalties set by the Committee's decision or the court judgment, whether in cash to the FTA or by an accredited bank guarantee in the FTA's favour.

In all cases a tax dispute claim is not admitted by the competent court unless an objection was first filed with the Committee.

Committee decisions on disputes up to AED 100,000 are a writ of execution. Decisions on disputes above that amount become a writ of execution if not challenged before the competent court within 40 business days of notification of the objection result.

The Cabinet may, on the Minister's proposal, modify both the amount and the percentage set for the admissibility of a court appeal.

Extending the deadlines

The deadlines are not absolute: the Law provides two distinct extension mechanisms — one on the authority's initiative and one on the person's application.

The FTA or the Committee may, for any reason, extend the decision periods — the period for deciding a review application, a reconsideration application and an objection — for a period specified by the Executive Regulation.

The FTA or the Committee may, at a person's request and on the grounds specified in the Executive Regulation, extend the filing periods — for a review application, a reconsideration application and an objection.

Where an extension request is refused, the FTA's or the Committee's decision is final and not open to further challenge. The length of any extension is set by Cabinet Decision No. 74 of 2023, the Executive Regulation; it should be checked against the current version when planning procedural timing.

How the deadlines are counted

Every period in the procedure runs in business days, and the Law sets three counting rules that determine whether a filing lands in time.

•     the day of notification, or the day on which the triggering event occurs, is excluded from the period;

•     where the last day of the period is not a business day, the period runs to the first following business day;

•     periods and dates are calculated by the Gregorian calendar.

A business day is any weekday other than weekends and public holidays of the Federal Government.

A residual rule fills the gaps: where no specific period is set for performing an obligation, the FTA grants a period proportionate to the nature of the obligation — not less than 5 and not more than 40 business days from the date of the event giving rise to it — and may extend it.

Instalments, waiver and refund of penalties

Alongside the appeal route there is an administrative path to reducing the burden that does not depend on the merits of the dispute.

A dedicated committee may, on the Director General's proposal, decide to allow payment of an administrative penalty in instalments, or to exempt from or refund it in whole or in part, under the controls and procedures issued by Cabinet decision on the Minister's proposal.

The committee is formed by decision of the Chairman of the FTA Board, under his chairmanship or that of his deputy, with two Board members. The mechanism runs in parallel with the appeal procedure and does not require the FTA's decision to be shown to be wrong.

Limitation: five years, four years, fifteen years

The general limitation period for audits and assessments is five years from the end of the relevant tax period, subject to six exceptions.

•     an audit notified before the five years expire may be completed within 4 years of the audit notification;

•     where the audit or assessment relates to a Voluntary Disclosure submitted in the fifth year after the end of the tax period, it must be completed within 1 year of the disclosure;

•     where it relates to a refund or credit balance application submitted in the fifth year or in the additional periods provided by law, it must be completed within 2 years of the application;

•     in cases of tax evasion an audit or assessment is possible within 15 years from the end of the tax period in which the evasion occurred;

•     in cases of failure to register an audit or assessment is possible within 15 years from the date registration was required;

•     the limitation period is interrupted on the grounds set out in the Civil Transactions Law.

No Voluntary Disclosure may be submitted after 5 years from the end of the relevant tax period, except a disclosure under Article 10(2) relating to a refund application on which the FTA has not yet decided.

A separate rule removes limitation for amounts already assessed: payable tax and administrative penalties of which the taxpayer has been notified do not lapse by prescription and may be claimed by the FTA at any time.

The criminal track and reconciliation

Administrative penalties and criminal liability run in parallel in the UAE, and imposing one does not exclude the other.

Tax evasion carries imprisonment and/or a fine of not less than the amount of the evaded tax and not more than three times that amount.

Deliberately refusing to pay a payable administrative penalty carries imprisonment and/or a fine of between one and three times that penalty, unless an exemption has been granted.

A separate offence covers intentionally providing false information to the FTA, concealing or destroying documents, stealing or damaging materials held by the FTA and obstructing its employees: imprisonment and/or a fine up to AED 1,000,000. Where those acts cause, conceal or facilitate evasion, the evasion penalty applies instead.

Recidivism is an aggravating circumstance: a recidivist is a person convicted by final judgment of one of these offences who commits another before five years have elapsed from the judgment.

The Law provides for reconciliation. Before criminal proceedings begin, the FTA may reconcile evasion offences and deliberate refusal to pay penalties against full payment of the tax and penalties. After proceedings begin and before conviction, the Public Prosecution may order reconciliation against full payment plus an amount equal to a percentage of the evaded tax set by the Executive Regulation. Reconciliation terminates the criminal proceedings.

Criminal proceedings for tax offences may only be brought on the written application of the FTA Director General.

The separate corporate tax scale

Corporate tax penalties sit in Cabinet Decision No. 75 of 2023 as amended by Cabinet Decision No. 10 of 2024. The 2025 reform left them alone: Cabinet Decision No. 129 of 2025 made no change to corporate tax, and the 2023 decision remains a standalone instrument.

Cabinet Decision No. 75 of 2023 was issued on 10 July 2023 and took effect on 1 August 2023. The penalty for failing to file a tax registration application was added to the schedule by Cabinet Decision No. 10 of 2024 and applies from 1 March 2024.

Under Article 2, the corporate tax penalties apply to violations of the Corporate Tax Law notwithstanding the provisions of Cabinet Decision No. 40 of 2017.

Corporate tax violation	Penalty
Failure to keep the required records and information	AED 10,000 per violation; AED 20,000 on repeat within 24 months
Failure to submit data and documents in Arabic on request	AED 5,000
Failure to file a deregistration application in time	AED 1,000 on late submission and monthly thereafter, up to AED 10,000
Failure to notify the Authority of circumstances requiring amendment of the tax record	AED 1,000 for the first violation; AED 5,000 on repeat within 24 months
Failure of a legal representative to notify their appointment	AED 1,000, payable from their own funds
Failure of a legal representative to file a tax return in time	AED 500 per month for the first 12 months; AED 1,000 per month from the 13th, from their own funds
Failure of a registrant to file a tax return in time	AED 500 for each month or part month for the first 12 months; AED 1,000 per month from the 13th
Failure to settle payable tax	14% per annum accruing monthly; for a disclosure and an assessment the due date is 20 business days from submission or receipt
Submitting an incorrect tax return	AED 500, unless the return is corrected before the filing deadline expires
Submitting a Voluntary Disclosure on errors in a return, assessment or refund application	1% per month on the tax difference
Failure to submit a Voluntary Disclosure before notification of a tax audit	15% fixed on the tax difference plus 1% per month
Failure to facilitate a tax audit	AED 20,000, from the person’s, representative’s or agent’s own funds
Failure to submit, or late submission of, a Declaration required under the Corporate Tax Law	AED 500 per month for the first 12 months; AED 1,000 per month from the 13th
Failure to file a tax registration application within the timeframe set by the FTA	AED 10,000

⚠ A starting point that has no equivalent in the VAT track. For corporate tax the monthly disclosure penalty — and the penalty for failing to disclose — may run not only from the due date of the return or the submission of the refund application, but also from the notification of the tax assessment. The tax procedures table offers no third alternative.

⚠ The two decisions solve the same technical problem differently. Where a monthly penalty falls on a date that does not exist in a given month, Article 3 of Cabinet Decision No. 75 of 2023 treats it as the last day of that month, while Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 49 of 2021 treats it as the first day of the following month. Where corporate tax and VAT penalties accrue in parallel, the accrual dates can diverge.

One more difference in detail: under corporate tax the AED 500 incorrect-return penalty is avoided only by correcting the return before the filing deadline. The tax procedures scale offers a second route — filing a disclosure that produces no difference in the tax due. That relief cannot be carried across.

The coincidence of the 14% per annum rate across both regimes is no accident: the 2025 reform in substance aligned the VAT and excise late payment model with the one already applying to corporate tax. Adjacent corporate tax ground is covered in Mainland vs Free Zone in 2026 and How to Set Up a Company in the UAE in 2026.

Waiver of the late corporate tax registration penalty

Alongside the general instalment and waiver mechanism, a targeted initiative removes the late registration penalty for corporate tax altogether.

The Federal Tax Authority issued Public Clarification CTP006, "Waiver of Administrative Penalty for Failure to Submit a Corporate Tax Registration Application within the Specified Timeline", on 17 July 2025. The initiative took effect on 14 April 2025 and covers penalties incurred from 1 June 2023.

There is a single condition: file the first corporate tax return — or, for certain categories of exempt person, the annual declaration — within 7 months of the end of the first tax period or first financial year, instead of the standard 9 months.

The consequence depends on the state of the penalty. An unpaid penalty is removed from the EmaraTax account. A paid penalty is credited to the EmaraTax account and may be applied against corporate tax payable or refunded. A pending reconsideration request in respect of that penalty is treated as null and void under the initiative, and where such a request has already been approved no further waiver is given.

⚠ The initiative does not move the payment deadline. The shortened seven-month window applies to filing only; the corporate tax itself remains payable within 9 months of the end of the tax period. The initiative applies to the first tax period only.

According to the Federal Tax Authority, more than 68,600 taxable persons had benefited from the initiative across 2025 and the elapsed part of 2026. Testing whether a particular first tax period qualifies, and preparing the return within the shortened window, is work for UPPERSETUP accounting services.

A nine-step plan on receiving a penalty or assessment

•     Step 1. Fix the notification date. Every forty-day period runs from it, and the day of notification is excluded from the count.

•     Step 2. Decide whether this is a dispute or an error. If the error is yours and tax was understated, disclosure is cheaper than a fight: 1% per month against 15% plus 1% once an audit is notified.

•     Step 3. Test the ceiling — aggregate administrative penalties cannot exceed twice the tax in the relevant assessment.

•     Step 4. Choose the first stage. A tax assessment can go to review under Article 28; any other decision goes straight to reconsideration under Article 29. The two do not run in parallel.

•     Step 5. File a reasoned application within 40 business days, allowing for a decision period of 40 business days plus 5 days for notification.

•     Step 6. Pay the full disputed tax before objecting to the Committee — without it the objection is not accepted.

•     Step 7. Weigh the AED 100,000 threshold. Below it, the Committee's decision is final and is a writ of execution.

•     Step 8. For court, prepare two documents: proof of full payment of the tax and proof of payment of at least 50% of the penalties, or an accredited bank guarantee.

•     Step 9. Consider the administrative route in parallel — an application for instalments, waiver or refund through the committee formed by the FTA Board.

•     Step 10. If the penalty relates to late corporate tax registration, test the CTP006 initiative: filing the first return within 7 months rather than 9 removes the AED 10,000 penalty automatically.

Common mistakes and what they cost

•     Computing penalties on the old scale. From 14 April 2026 late payment is 14% per annum, disclosure is 1% per month and failure to disclose before an audit notification is 15% plus 1% per month. Provisions built on the 2021 model are wrong by multiples.

•     Delaying disclosure until an audit. The fixed 15% on the tax difference arises precisely at the moment of the audit notification. It is the single most expensive date in the whole design.

•     Objecting to the Committee without paying the tax in full. The objection is not accepted, and the forty-day clock keeps running.

•     Going to court without proof of paying 50% of penalties. The appeal is inadmissible; the only alternative to cash is an accredited bank guarantee in the FTA's favour.

•     Skipping the Committee stage. A court will not admit a tax claim unless an objection was first filed with the Committee, and the order of stages cannot be restored retrospectively.

•     Running review and reconsideration together. No review application may be filed or continued once a reconsideration application has been submitted.

•     Overlooking the twenty business days after a disclosure. The late payment penalty on a disclosure starts not on the filing date but twenty business days later; leaving that window unused wastes free time, overrunning it starts the accrual.

•     Carrying VAT rules across to corporate tax. They are two scales: under corporate tax the incorrect-return penalty is avoided only by correcting the return before the filing deadline, and monthly dates missing from a month fall on the last day of that month rather than the first day of the next.

•     Not using the late registration waiver. Filing the first return within 7 months rather than 9 cancels the AED 10,000 penalty automatically; missing that window loses the amount with no way back.

•     Assuming the five-year limitation is universal. For evasion and for failure to register the period is 15 years, and an audit properly notified in time may run for a further 4 years.

Who needs specialist review, and when

Situations with an obvious technical error and a small tax difference are manageable in-house: the disclosure is filed, the penalty is arithmetic, and no dispute arises.

Review is warranted in five situations: on receiving an audit notification, when the disclosure decision must be taken before the audit begins; where the tax difference is such that the fixed 15% is comparable to the cost of a defence; where the dispute sits near the AED 100,000 threshold that determines finality of the Committee's decision; when planning the court stage, which requires full payment of tax and half the penalties; and on any suggestion that conduct might be characterised as evasion, which brings in the fifteen-year period and the criminal track.

Where a structure is still being designed, it is cheaper to build the accounting perimeter so that errors surface within the period: UPPERSETUP company registration services cover the corporate side, and the options for moving an existing structure are set out in Redomiciliation to the UAE in 2026.

Frequently asked questions

What is the late payment penalty in the UAE in 2026?

From 14 April 2026 it is 14% per annum, imposed for each month or part thereof on the unpaid amount, from the day following the due date. The former 2% plus 4% monthly construction no longer applies.

What does a Voluntary Disclosure cost?

One per cent per month on the tax difference for each month or part thereof, from the day following the due date of the return or the refund application until the disclosure is filed. The former tiered 5% to 40% scale no longer applies.

What happens if no disclosure is filed before an audit notification?

Two penalties apply together: a fixed 15% on the tax difference and 1% per month. The monthly element runs to the date of the disclosure if one is filed after the notification, or to the date the tax assessment is issued if none is filed.

What is the deadline for a Reconsideration application?

Forty business days from notification of the FTA decision. The application must be reasoned. The FTA decides within 40 business days and notifies the applicant within 5 business days.

Must the tax be paid before objecting to the TDRC?

Yes. An objection is not accepted unless the full tax subject of the objection has been paid. Payment of administrative penalties is not a condition at that stage.

When is a TDRC decision final?

Where the total of payable tax and administrative penalties specified in the decision does not exceed AED 100,000. Such a decision is a writ of execution.

What conditions apply to a court appeal?

The appeal must be filed within 40 business days of notification of the Committee's decision, supported by proof of full payment of the tax and proof of payment of at least 50% of the administrative penalties in cash or an accredited bank guarantee in the FTA's favour. An objection must also have been filed with the Committee first.

What is the limitation period for UAE tax audits?

Five years from the end of the tax period as a general rule. For tax evasion and for failure to register the period is 15 years. An audit notified before the five years expire may be completed within 4 years of the notification.

Key takeaways

•     Cabinet Decision No. 129 of 2025 was issued on 9 October 2025 and applies from 14 April 2026, amending Tables 1 and 3 appended to Cabinet Decision No. 40 of 2017.

•     Late payment is 14% per annum accruing monthly; for a disclosure and an assessment the due date is 20 business days from filing or receipt.

•     A Voluntary Disclosure costs 1% per month on the tax difference; failing to disclose before an audit notification costs 15% plus 1% per month.

•     Disclosure is mandatory only under Article 10(1) and (2); a disclosure in the taxpayer's favour carries no penalty.

•     Aggregate administrative penalties cannot exceed twice the tax in the relevant assessment.

•     The appeal chain is review under Article 28, reconsideration under Article 29, objection to the Committee under Articles 30 to 33, and court under Article 36 — each with a 40-business-day deadline.

•     Admission to the Committee requires full payment of the tax; admission to court requires full payment of tax plus at least 50% of penalties or a bank guarantee.

•     A Committee decision is final where tax and penalties total no more than AED 100,000.

•     Limitation is 5 years, or 15 years for evasion and failure to register; no disclosure may be filed after 5 years.

•     Corporate tax runs on a separate scale under Cabinet Decision No. 75 of 2023 as amended by Cabinet Decision No. 10 of 2024, with its own disclosure rules and its own monthly-date convention.

•     The AED 10,000 late corporate tax registration penalty is waived or refunded where the first return is filed within 7 months of the end of the first tax period.

Summary 

UAE administrative penalties under the Tax Procedures, VAT and Excise Laws sit in Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 49 of 2021, Cabinet Decision No. 108 of 2021 and Cabinet Decision No. 129 of 2025, which was issued on 9 October 2025 and applies from 14 April 2026. From that date the late payment penalty is 14% per annum for each month or part thereof, and for a Voluntary Disclosure or a tax assessment the due date is 20 business days from submission or receipt respectively. The Voluntary Disclosure penalty is 1% per month on the tax difference, while failing to disclose before notification of a tax audit costs a fixed 15% plus 1% per month. An incorrect return costs AED 500 unless corrected within the filing deadline; failure to keep records costs AED 10,000 and AED 20,000 on repeat within 24 months; failure to provide documents in Arabic costs AED 5,000; failure to register costs AED 10,000; and obstructing an audit costs AED 20,000. Aggregate administrative penalties may not exceed twice the tax in the relevant assessment. Appeals under Federal Decree-Law No. 28 of 2022 run in four stages: an application for tax assessment review under Article 28 within 40 business days, an application for reconsideration under Article 29 within 40 business days, an objection to the Tax Disputes Resolution Committee under Article 32 within 40 business days and conditional on full payment of the tax, and an appeal to the competent court under Article 36 within 40 business days and conditional on full payment of the tax plus at least 50% of the administrative penalties or an accredited bank guarantee. A Committee decision is final where tax and penalties total no more than AED 100,000. The limitation period is 5 years from the end of the tax period, extended to 15 years for tax evasion and for failure to register.

Sources

•     Federal Decree-Law No. 28 of 2022 on Tax Procedures — full text on the UAE legislation portal — Articles 10, 23, 25 to 36, 46, 47 and 50

•     Federal Decree-Law No. 28 of 2022 and its amendments — consolidated text published by the Federal Tax Authority

•     Cabinet Decision No. 40 of 2017 and its amendments, including Cabinet Decision No. 129 of 2025 — consolidated text published by the Ministry of Finance

•     Cabinet Decision No. 49 of 2021 — text on the Federal Tax Authority website

•     Cabinet Decision No. 75 of 2023 and its amendment by Cabinet Decision No. 10 of 2024 — consolidated text published by the Ministry of Finance

•     Federal Tax Authority — the corporate tax late registration penalty waiver initiative

•     Federal Tax Authority — uptake of the waiver initiative as at May 2026

•     Deloitte Middle East — Public Clarification CTP006 on the penalty waiver

•     Tax legislation on the Federal Tax Authority website — Cabinet Decision No. 74 of 2023, Cabinet Decision No. 75 of 2023 and Cabinet Decision No. 10 of 2024

•     Resolving tax disputes — the official UAE Government portal

•     Andersen UAE — Cabinet Decision No. 129 of 2025: key amendments to the administrative penalty framework

•     PwC Middle East — amendment of administrative penalties imposed for violation of tax laws

Disclaimer

This material is for informational purposes only and does not constitute legal, tax, financial, investment or consulting advice. Before making decisions, obtain individual professional advice taking account of your specific circumstances, jurisdiction, company status and current regulatory requirements. Information is accurate as of August 2026.