Corporate Tax UAE

UAE Tax Penalties 2026: Full List Under Cabinet Decision 129 of 2025

Tax forms and calculator representing UAE Cabinet Decision 129 of 2025 unified corporate tax, VAT, and excise penalty framework

12 min read

Published: 23 July 2026

If you have been fined by the Federal Tax Authority (FTA) any time since April 2026, or you are trying to work out what a late filing or a missed registration will actually cost you today, the rulebook changed under you. Cabinet Decision No. 129 of 2025 rewrote the UAE’s administrative penalty framework, replacing large parts of the older Cabinet Decision No. 40 of 2017 (VAT and excise penalties) and adjusting how penalties are calculated across Tax Procedures generally. It took effect on 14 April 2026.

This is the single reference point for every UAE tax penalty currently in force: what changed, what stayed the same, and where the old and new rules overlap. Two things it deliberately does not repeat in depth: the mechanics of the 31 July 2026 first-return penalty waiver (covered fully in our Corporate Tax Penalty Waiver Deadline guide) and VAT late filing specifics (covered in our VAT Late Filing Penalty guide). This post is the umbrella schedule that ties both of those, and every other tax penalty, together.

What Cabinet Decision No. 129 of 2025 Actually Changed

Cabinet Decision No. 129 of 2025 was issued on 9 October 2025, published by the FTA on 11 November 2025, and came into force on 14 April 2026. It amends Cabinet Decision No. 40 of 2017 on administrative penalties for violations of tax laws, and it now references Federal Decree-Law No. 28 of 2022 on Tax Procedures rather than the older Federal Law No. 7 of 2017.

The headline goals stated by the Cabinet are simplification, proportionality, and transparency, aimed at encouraging voluntary compliance rather than compounding fines that disproportionately hit small businesses.

The most significant structural change is the late payment penalty. Under the old regime, VAT and excise late payment carried an immediate percentage penalty plus a separate monthly percentage that compounded, which could escalate quickly. Under Cabinet Decision No. 129 of 2025, late payment on VAT and excise now accrues at a flat annualised rate of 14%, calculated monthly on the outstanding balance, replacing the old layered 2% (immediate) plus 4% (monthly) structure. This aligns the VAT/excise late payment mechanism with the monthly-accrual logic corporate tax has used since Cabinet Decision No. 75 of 2023.

Important scope note: advisors are not unanimous on how far the harmonisation goes. Some analysis treats Cabinet Decision No. 129 of 2025 as unifying penalty logic across corporate tax, VAT, and excise. Other advisory sources are explicit that the amendments apply to VAT and excise tax obligations, and that corporate tax administrative penalties continue to be governed separately under Cabinet Decision No. 75 of 2023, which remains unchanged and still uses its own penalty table under Federal Decree-Law No. 47 of 2022. Businesses should treat corporate tax penalties as still following the 75/2023 table specifically, and verify any cross-tax penalty a consultant applies to you against the FTA’s own published guide before paying it. Verify the exact scope with FTA guidance or your tax advisor before assuming a specific penalty rate applies across all three taxes.

Full UAE Tax Penalty Table (Post-14 April 2026)

Violation	Penalty Under New Framework	Notes
Late tax registration (VAT/excise)	AED 10,000	Longstanding figure carried from the prior regime; confirm current amount with FTA before relying on it for a specific case
Late corporate tax registration	AED 10,000 (subject to the 31 July 2026 waiver for eligible first-year filers)	See our dedicated waiver guide for full mechanics
Late VAT/excise return filing	AED 1,000 for the first offence, AED 2,000 for repeated offences within 24 months (legacy figures – verify with FTA whether Cabinet Decision 129/2025 revised these)	Full breakdown in our VAT Late Filing Penalty guide
Late payment of tax due (VAT/excise)	14% per annum, accrued monthly on the outstanding balance	Replaces the old 2% immediate + 4% monthly structure
Voluntary disclosure, before FTA notifies you of an audit	1% per month on the tax difference	Down from the layered penalties under the old regime
Voluntary disclosure, after FTA notifies you of an audit	Additional fixed penalty of 15%	Reduced from up to 50% under the prior framework
Failure to issue a compliant tax invoice within the required window (e-invoicing)	AED 2,500 per detected case	Applies under the e-invoicing compliance push tied to Cabinet Decision No. 106 of 2025
Recurring/ongoing e-invoicing non-compliance once mandatory phases begin (from mid-2026)	Reported at up to AED 5,000 per month for continued failure	Verify with FTA – confirm the exact figure and phase-in date for your business category before budgeting around it
Failure to maintain required records in Arabic	AED 5,000	Reduced from AED 20,000 under the old rule
Failure to keep accounting records/documents as required	AED 10,000 for the first violation, AED 20,000 for repeated violations (legacy figures)	Confirm current amounts with FTA; not explicitly detailed in the public summaries of 129/2025

Where this table says “verify with FTA,” it is because public summaries of Cabinet Decision No. 129 of 2025 available at the time of writing do not confirm the exact figure with certainty. Do not rely on an unverified number to plan a dispute or a payment; check the FTA’s official penalty schedule or ask your tax advisor to confirm the current published amount before acting.

How the 31 July 2026 Waiver Fits In

If your business missed its corporate tax registration deadline and is filing its first tax return, the FTA’s penalty waiver initiative can reduce or eliminate the AED 10,000 late registration penalty, provided you file the return (or an annual declaration for exempt persons) within the qualifying window, which the FTA extended to 31 July 2026 for eligible taxpayers. This waiver sits alongside, not instead of, the broader penalty framework in Cabinet Decision No. 129 of 2025: the waiver removes one specific penalty for one specific group, while the rest of the schedule above still applies to VAT, excise, filing, payment, and disclosure violations. Full eligibility conditions and how to apply are in our dedicated waiver deadline guide.

How to Dispute or Reduce a Penalty

Check the penalty is correctly calculated first. FTA portal penalty notices sometimes reference the older percentage-based late payment structure if a case straddles the 14 April 2026 transition date. Confirm which regime applies to your specific violation period.
File a Voluntary Disclosure Form (VDF) before FTA contacts you, if you have found an error yourself. This alone can cut the applicable penalty from double digits down to 1% per month on the tax difference.
Submit a formal Reconsideration Request within 40 business days of the penalty decision if you believe it was applied incorrectly, using the FTA’s official reconsideration process, with supporting evidence.
Apply for the Tax Disputes Resolution Committee (TDRC) route if the reconsideration is rejected and the amount justifies it.
Ask about penalty waiver eligibility for late corporate tax registration specifically, given the 31 July 2026 window described above.
Keep proof of your registration and filing dates. Many disputes come down to a business being able to show it acted within the deadline, even where the FTA system shows a delay.

Do not attempt to negotiate an amount informally; all penalty relief in the UAE tax system runs through the FTA’s formal reconsideration, voluntary disclosure, or waiver channels.

Corporate Tax vs VAT vs Excise: Which Table Applies to You

If you are a corporate tax payer (mainland company, most free zone entities, or an exempt person required to file), your registration and filing penalties are assessed under Cabinet Decision No. 75 of 2023, not Cabinet Decision No. 129 of 2025, according to the advisory sources that treat the two as separate regimes. Procedural definitions (what counts as a “violation,” how disclosure works) now align with Federal Decree-Law No. 28 of 2022 across both.
If you are VAT or excise registered, your late filing, late payment, and disclosure penalties are assessed under the newly amended framework in Cabinet Decision No. 129 of 2025, effective 14 April 2026.
If you are subject to e-invoicing requirements, penalties for non-compliance sit under the e-invoicing rollout tied to Cabinet Decision No. 106 of 2025, phased in through 2026.

Because three separate Cabinet Decisions now govern different slices of the same overall tax-penalty landscape, the safest approach for any business with exposure across corporate tax, VAT, and e-invoicing is to have a single advisor cross-check penalty notices against the correct decision rather than assuming one flat rulebook applies everywhere.

Timeline: How the UAE Tax Penalty Framework Got Here

Understanding today’s penalty schedule is easier with the sequence of decisions behind it:

2017 – Cabinet Decision No. 40 of 2017 set the original administrative penalties for VAT and excise violations, alongside Federal Law No. 7 of 2017 on Tax Procedures.
2022 – Federal Decree-Law No. 28 of 2022 on Tax Procedures replaced the 2017 procedures law, updating definitions and timelines used across all UAE taxes.
2023 – Cabinet Decision No. 75 of 2023 introduced the dedicated corporate tax penalty table, aligned to Federal Decree-Law No. 47 of 2022 on corporate tax, as the UAE’s corporate tax regime came into force for financial years starting on or after 1 June 2023.
9 October 2025 – Cabinet Decision No. 129 of 2025 was issued, amending the 2017 penalty framework for VAT and excise.
11 November 2025 – The FTA published the decision publicly.
14 April 2026 – Cabinet Decision No. 129 of 2025 came into effect.
Mid-2026 onward – E-invoicing penalties under Cabinet Decision No. 106 of 2025 phase in alongside the mandatory e-invoicing rollout.

Each of these decisions still applies to the specific violations it governs; none of them fully replaces the others, which is exactly why businesses exposed to more than one tax type need to check the correct table for each violation rather than assuming one unified schedule covers everything.

Why the Reform Happened

The FTA and Ministry of Finance have both framed Cabinet Decision No. 129 of 2025 as a response to feedback from businesses, particularly SMEs, that the old compounding penalty structure under Cabinet Decision No. 40 of 2017 punished minor administrative delays disproportionately. A short late payment, for example, could snowball under the old 2% immediate plus 4% monthly compounding model far faster than the tax difference itself justified. The flat 14% annualised rate replaces that compounding effect with a single, predictable number that is easier for a business (or its accountant) to forecast and provision for.

The reduction in voluntary disclosure penalties, from a maximum around 50% post-audit-notification down to a fixed 15%, plus the very low 1% per month for pre-notification disclosures, is also a deliberate signal: the FTA wants businesses to self-correct errors rather than hope they go unnoticed. If you find a mistake in a filed return, disclosing it voluntarily before any audit notification is now clearly the cheaper path under the new framework, regardless of which specific decision ultimately governs the tax type involved.

Common Mistakes Businesses Make With Penalty Assessments

Assuming one universal rate applies across corporate tax, VAT, and excise. As covered above, this is not confirmed and advisory sources disagree; corporate tax likely still runs under Cabinet Decision No. 75 of 2023.
Paying a penalty notice without checking which regime governs the violation date. A violation that occurred before 14 April 2026 may still be assessed under the old rules.
Missing the voluntary disclosure window. Filing a VDF after the FTA has already opened an audit loses access to the lower 1% per month rate.
Treating the 31 July 2026 waiver as covering more than late corporate tax registration. It does not extend to VAT, excise, or e-invoicing penalties.
Not keeping Arabic-language records where required, which still triggers a penalty (now reduced to AED 5,000, but still enforced).

Frequently Asked Questions

Does Cabinet Decision No. 129 of 2025 replace corporate tax penalties?
Not according to most advisory analysis. Corporate tax registration and filing penalties continue under Cabinet Decision No. 75 of 2023. Cabinet Decision No. 129 of 2025 primarily amends VAT and excise tax penalties, though it aligns procedural definitions with the same Federal Decree-Law No. 28 of 2022 that governs corporate tax procedures.

When did the new penalty framework take effect?
14 April 2026, following the decision’s issuance on 9 October 2025 and FTA publication on 11 November 2025.

What is the new late payment penalty rate?
14% per annum, accrued monthly on the outstanding tax balance, for VAT and excise. This replaces the prior 2% immediate penalty plus 4% monthly compounding structure.

Can a penalty be reduced if I disclose the error myself?
Yes. Voluntary disclosure made before the FTA notifies you of an audit currently carries a 1% per month penalty on the tax difference, far lower than penalties applied after an audit notification, which add a fixed 15%.

Is the AED 10,000 late registration penalty still in effect?
It has historically applied to VAT, excise, and corporate tax late registration. Confirm the current figure with the FTA directly, since public summaries of Cabinet Decision No. 129 of 2025 do not universally confirm whether this specific amount changed.

Does the 31 July 2026 waiver apply to VAT penalties too?
No. The waiver initiative is specific to corporate tax late registration penalties for first-return filers. It does not extend to VAT, excise, or e-invoicing penalties.

What happens if I am fined under the old rules for a violation that occurred before 14 April 2026?
Penalties are generally assessed based on the rules in force at the time of the violation. If your violation period straddles the transition date, ask the FTA or your advisor to confirm which framework applies to your specific case.

Are e-invoicing penalties part of Cabinet Decision No. 129 of 2025?
E-invoicing non-compliance penalties are tied to the separate e-invoicing mandate under Cabinet Decision No. 106 of 2025, phased in through 2026, rather than being a core part of 129/2025 itself.

How do I dispute a penalty I believe was calculated incorrectly?
Submit a formal Reconsideration Request to the FTA within 40 business days of the penalty decision, with supporting documentation. If rejected, escalate to the Tax Disputes Resolution Committee.

Where can I find the official penalty schedule?
The FTA publishes penalty schedules and guides on its official website. Because public secondary sources do not agree on every figure under the new framework, always cross-check a specific number against the FTA’s own publication before relying on it for a filing or dispute decision.