VAT Penalties in the UAE (2026): The Full FTA Penalty Table, Late Payment Maths, Disclosures and How to Get Relief

The UAE rewrote most of its tax penalties on 14 April 2026, when Cabinet Decision No. 129 of 2025 amended the penalty tables in Cabinet Decision No. 40 of 2017. Many websites, and some invoices from advisers, still quote the old figures. This guide is for business owners and finance teams who've received a penalty notice, found an error in a past return or simply want to know what's at stake. It sets out every VAT-related penalty as it stands today, shows how the time-based charges are counted with dated AED examples, and explains the three routes to relief: reconsideration, waiver and instalments.

Quick answer

UAE VAT penalties are set by Cabinet Decision No. 40 of 2017, as amended from 14 April 2026. Late payment now costs 14% a year, charged monthly on unpaid tax. A late return is AED 1,000 (AED 2,000 for a repeat within 24 months). Fixing an error by voluntary disclosure costs 1% a month of the tax difference; waiting for an audit adds a fixed 15%.

• Late registration: AED 10,000; late deregistration: AED 1,000 a month (max AED 10,000)

• Missing tax invoice or credit note: AED 2,500 per case

• Challenge a wrong penalty within 40 business days by reconsideration request

• Ask for a waiver or instalments on EmaraTax under Cabinet Decision No. 105 of 2021

What changed on 14 April 2026

Cabinet Decision No. 129 of 2025 was issued on 9 October 2025 and came into force on 14 April 2026. The FTA announced it the next day and urged registrants with existing violations to use the new rules to put things right. The amendments rewrote Table 1, which covers violations of the Tax Procedures Law and applies to both VAT and excise tax, and Table 3, which covers VAT-specific violations.

The most important change is to late payment. Under the old regime, described in the FTA's 2021 returns guide, unpaid tax attracted 2% on the day after the due date, then 4% a month, up to a cap of 300%. That front-loaded structure made a few weeks' delay expensive. The new charge is a flat 14% a year, applied monthly, so a short delay costs a little over 1% of the tax.

Voluntary disclosures moved from fixed percentages, which Andersen's analysis describes as tiers from 5% to 40% depending on how late the error was disclosed, to 1% a month of the tax difference. The penalty for errors the FTA finds after notifying an audit fell from 50% plus 4% a month to 15% plus 1% a month. Several flat fines also came down.

Old and new penalties at a glance

Violation	Before 14 April 2026	From 14 April 2026
Late payment of tax	2% next day + 4% a month, up to 300%	14% a year, charged monthly
Voluntary disclosure	Fixed 5–40% depending on timing	1% a month on the difference
Error found after audit notice	50% + 4% a month	15% + 1% a month
Records not provided in Arabic	AED 20,000	AED 5,000
Tax record not updated	AED 5,000 / AED 10,000 repeat	AED 1,000 / AED 5,000 repeat
Legal representative not notifying appointment	AED 10,000	AED 1,000

Late payment of tax

Before 14 April 2026

2% next day + 4% a month, up to 300%

From 14 April 2026

14% a year, charged monthly

Voluntary disclosure

Before 14 April 2026

Fixed 5–40% depending on timing

From 14 April 2026

1% a month on the difference

Error found after audit notice

Before 14 April 2026

50% + 4% a month

From 14 April 2026

15% + 1% a month

Records not provided in Arabic

Before 14 April 2026

AED 20,000

From 14 April 2026

AED 5,000

Tax record not updated

Before 14 April 2026

AED 5,000 / AED 10,000 repeat

From 14 April 2026

AED 1,000 / AED 5,000 repeat

Legal representative not notifying appointment

Before 14 April 2026

AED 10,000

From 14 April 2026

AED 1,000

One question the published text doesn't settle is how the new rates apply to violations that began before 14 April 2026, for example tax that was already overdue on that date. The FTA's announcement and the consolidated decision don't include a transitional rule. If you have older unpaid tax or disclosures in progress, ask the FTA through EmaraTax or a registered tax agent how your account has been treated before you rely on either set of figures.

The full VAT penalty table in 2026

The table below lists every penalty in Tables 1 and 3 of Cabinet Decision No. 40 of 2017, as amended, that can apply to a VAT registrant. Amounts are in AED.

E-invoicing has its own fines under Cabinet Resolution No. 106 of 2025, separate from this table: AED 5,000 a month for failing to implement the system or appoint an Accredited Service Provider on time, and AED 100 (max AED 5,000 a month) per e-invoice not issued or transmitted on time. Our UAE e-invoicing guide covers those dates and fines.

A penalty never replaces the tax. Article 3 of the decision says paying an administrative penalty doesn't relieve you of the tax due, so the FTA collects both.

How the late payment charge is counted

Item 9 of Table 1 charges 14% a year on the unpaid payable tax, for each month or part of a month, starting the day after the due date and then on the same date each month until you pay. Because part months count as full months, the charge is effectively 14% ÷ 12, roughly 1.17%, of the unpaid balance each time it's applied. Where a month has no matching date, for example the 30th in February, the charge falls on the first day of the next month, under a rule carried over from Cabinet Decision No. 49 of 2021.

For tax arising from a voluntary disclosure or an FTA tax assessment, the due date is set specially: 20 business days after you submit the disclosure, or after you receive the assessment. Pay within that window and no late payment charge applies to that tax.

Late payment on AED 100,000 of unpaid VAT

AED 1,167

1 month (or part)

14% ÷ 12

AED 3,500

3 months

AED 7,000

6 months

AED 14,000

12 months

Example 1. A Dubai retailer's VAT return for July to September shows AED 60,000 payable, due on 28 October. It pays AED 20,000 on time and the remaining AED 40,000 on 15 January.

• 29 October: 14% ÷ 12 × AED 40,000 = AED 466.67
• 29 November: AED 466.67
• 29 December: AED 466.67
• Paid 15 January, before the 29 January charge date

Total late payment penalty: AED 1,400. Under the old regime the same delay would have cost 2% plus 4% for each of two further months, about AED 4,000. The return itself was filed on time, so there's no late-filing penalty.

Late returns and the 24-month repeat rule

Filing late costs AED 1,000 the first time. Any further late return within 24 months of the previous one costs AED 2,000, and that higher amount keeps applying as long as late returns keep falling inside a rolling 24-month window. A business that files three quarters late in a row pays AED 1,000, AED 2,000 and AED 2,000.

Nil returns count. A company that registered voluntarily and then stopped trading without deregistering will collect a late-filing penalty every quarter. If you've stopped making taxable supplies, apply to deregister within 20 business days; a late application costs AED 1,000 a month (max AED 10,000), and the FTA won't approve deregistration until returns and payments are up to date.

If you don't file at all, the FTA can issue a tax assessment estimating what you owe. The tax in an assessment becomes due 20 business days after you receive it, so an estimated figure can quickly start attracting the 14% charge as well. Our VAT return guide explains the filing deadlines and each box.

Voluntary disclosures versus waiting for an audit

When you find an error in a past return, the size decides the route. Under Article 10 of the Tax Procedures Executive Regulation, an error that changes the tax by AED 10,000 or less is corrected in your next return, while a larger one requires a voluntary disclosure within 20 business days of becoming aware of it.

The disclosure penalty is 1% a month of the tax difference for each month or part of a month, from the day after the original return was due to the day you submit the disclosure. Delay doesn't help: every month adds another 1%. The AED 500 incorrect-return penalty can also apply, because its exceptions only cover corrections made within the filing deadline and disclosures that don't change the tax.

If the FTA notifies you of a tax audit before you disclose, item 12 applies: a fixed 15% of the tax difference, plus 1% a month running to the date of your disclosure or, if you never disclose, to the date the FTA issues its assessment.

Example 2. A Sharjah contractor discovers in early September that its January to March return, due 28 April, understated output tax by AED 50,000.

• It submits a voluntary disclosure on 10 September. From 29 April to 10 September is four full months and part of a fifth, so the penalty is 5% × AED 50,000 = AED 2,500, plus the AED 500 incorrect-return penalty. It pays the AED 50,000 within 20 business days, so no late payment charge.
• Had it waited and received an audit notice first, then disclosed on the same date, the penalty would be 15% × AED 50,000 = AED 7,500, plus the same AED 2,500 monthly element: AED 10,000.

Example 2 — how the disclosure penalty builds up

28 April

January–March return due (understated by AED 50,000)

29 April

1% monthly charge starts running

10 September

Voluntary disclosure submitted — five months or part: 5%

+20 business days

AED 50,000 tax due; late payment charge starts if unpaid

The new structure has one catch. Because the monthly charge has no cap, a very old error can now cost more than it would have under the old tiers. Andersen's comparison shows an AED 200,000 error disclosed after 18 months attracting 18%, or AED 36,000, against a 10% fixed penalty under the previous rules. The lesson is to review past returns regularly and disclose quickly, not to wait.

Invoices, records and imports

Some of the largest exposures come from day-to-day paperwork rather than returns. Each tax invoice or credit note not issued within the legal time limit is a separate case at AED 2,500, so a systemic failure, such as a branch issuing plain receipts to business customers for a year, can multiply quickly. The same amount applies per case to breaches of the rules on issuing invoices and credit notes electronically.

Records matter just as much. Failing to keep the records the law requires costs AED 10,000, and AED 20,000 for a repeat within 24 months. If the FTA asks for documents in Arabic and you can't provide them, the penalty is now AED 5,000. Obstructing an auditor costs AED 20,000, payable from the personal funds of whoever was responsible where that's the tax agent or legal representative.

Where a supplier's tax invoice is wrong rather than missing, the fix is a tax credit note or a corrected invoice, issued within the legal time limit, not a silent edit in your accounting system. Train branch and sales staff on when a full tax invoice is needed and when a simplified one is allowed, because the per-case penalty is charged on each document the FTA finds during an audit.

Importers should note item 15: failing to account for VAT due on imported goods costs 50% of the unpaid or undeclared tax. If you're VAT-registered, make sure every customs registration number you use is linked to your TRN, so imports appear in Box 6 of your return, and correct any gaps in Box 7. Retailers should also check that prices shown to consumers include VAT, since not doing so costs AED 5,000.

How to challenge, reduce or spread a penalty

There are three distinct routes, and they answer different problems.

Reconsideration, when the penalty is wrong. If you believe the FTA has made a mistake, for example it charged a late-filing penalty on a return you submitted on time, or calculated late payment on the wrong amount, file a reconsideration request on EmaraTax (Taxable Person profile, then Other Services, then Reconsiderations). You have 40 business days from notification, and you can ask for an extension under FTA Decision No. 1 of 2025. Attach the factual and legal grounds and the evidence. The FTA aims to decide within 45 business days, and it can extend that period. If you're unhappy with the outcome, the dispute can go to the Tax Disputes Resolution Committee and then the courts. Reconsideration is free, and only you or a registered tax agent can file it.

Waiver, when the penalty is right but you have a case for relief. Cabinet Decision No. 105 of 2021 lets a committee waive administrative penalties. The request is free and goes through EmaraTax under the penalty waiver option. You must give an undertaking that the violation has been corrected and won't be repeated, and the committee can ask for more information. The FTA says it decides within 110 business days. Waiver is discretionary, so explain the circumstances and show what you've changed.

Instalments, when you can't pay at once. The same decision allows penalties to be paid in instalments where unsettled penalties total at least AED 50,000 for one tax type. The tax for the periods concerned must already be filed and paid, the penalties mustn't be before the Tax Disputes Resolution Committee or a court, and you undertake to pay as the committee approves. The FTA's service pages differ on whether you can ask for a waiver and an instalment plan for the same penalty at once, so check the current form on EmaraTax.

Responding to a penalty notice

1. 1

   Check the notice against your records

   Confirm the period, due date, amounts and the date the FTA says you filed or paid.

2. 2

   Correct the underlying problem

   File the missing return, pay the tax or submit the voluntary disclosure. The late payment charge keeps running until the tax is paid.

3. 3

   Decide the route

   Penalty wrong? Reconsideration within 40 business days. Penalty right but harsh? Waiver request. Can't pay? Instalments if AED 50,000+.

4. 4

   File on EmaraTax with evidence

   Upload documents in PDF and keep the reference number.

   Open EmaraTax

The corporate tax late-registration waiver that the FTA has publicised is a separate, corporate-tax-only scheme and doesn't cover VAT penalties.

How to avoid VAT penalties

Most penalties trace back to a handful of habits. Put every return and payment date in a shared calendar with a reminder a week before. File on time even when the payment isn't ready, because the late-filing penalty is separate and avoidable. Reconcile Box 6 with customs data and imported services with your foreign payments every quarter. Keep invoices, contracts and working papers in an organised, retrievable form for the full retention period. Update EmaraTax within the time limit whenever your address, activities, owners or signatories change. And review past returns at least once a year; under the new structure, an error found and disclosed quickly is cheap, while the same error left for two years is not.

If you're not yet registered but close to the threshold, read our VAT registration guide, because late registration is one of the costliest mistakes on the table.

Official links

• Cabinet Decision No. 40 of 2017 as amended (penalty tables)Consolidated text incl. Cabinet Decision 129 of 2025
• FTA — penalty amendments in force (15 April 2026)Announcement
• FTA — penalty waiver, instalment and refund requestsCabinet Decision 105 of 2021
• FTA — reconsideration request40 business days
• EmaraTax portalDisclosures, payments, requests

What to do next

Log in to EmaraTax and check the penalties and balances shown on your account, then compare them with the table above. If something looks wrong, start a reconsideration request inside the 40 business days window. If you've found an error in a past return, work out whether it's above AED 10,000 and disclose it within 20 business days. Our UAE VAT return guide shows how to correct smaller errors in your next return, and the UAE VAT calculator helps you check the tax on individual invoices.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the penalty for late VAT payment in the UAE?

Since 14 April 2026 it's 14% a year, charged monthly on the unpaid tax. The first charge falls on the day after the due date and then on the same date each month, for each month or part of a month, so roughly 1.17% of the unpaid amount a month. It replaced the old 2% immediate plus 4% monthly regime.

What is the penalty for filing a VAT return late?

AED 1,000 for the first late return, and AED 2,000 for each further late return within 24 months. That's separate from the late payment charge, so file on time even if you can't pay in full, and pay the balance as soon as you can to stop the monthly charge growing.

How much is the voluntary disclosure penalty in the UAE?

1% a month of the tax difference for each month or part of a month, counted from the day after the original return was due until the day you submit the disclosure. If the FTA has already notified you of an audit, a fixed 15% of the difference is added on top of the monthly charge.

Can FTA penalties be waived?

You can ask. Under Cabinet Decision No. 105 of 2021, a committee considers requests to waive penalties or pay them in instalments, filed free on EmaraTax and decided within about 110 business days. Instalments need at least AED 50,000 of unsettled penalties, and the tax behind them must be filed and paid. Separately, you can challenge a penalty that's wrong through reconsideration.

How long do I have to object to a VAT penalty?

File a reconsideration request on EmaraTax within 40 business days of being notified of the decision. The FTA aims to respond within 45 business days. If you disagree with the outcome, the next step is the Tax Disputes Resolution Committee, and after that the courts.

What is the penalty for not registering for VAT on time?

AED 10,000, unchanged by the 2026 amendments. The FTA also registers you from the date you should have been registered, so you owe VAT on every taxable sale since then, plus late payment charges if that tax is paid late.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 12 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Cabinet Decision No. 40 of 2017 and its amendments (incl. Cabinet Decision No. 129 of 2025) — Federal Tax Authority / Ministry of Finance · accessed 12 October 2026
2. 2.FTA announces entry into force of the decision amending administrative penalties — Federal Tax Authority · accessed 12 October 2026
3. 3.Requests for instalment, waiver and refund of administrative penalties — Federal Tax Authority · accessed 12 October 2026
4. 4.Reconsideration request — Federal Tax Authority · accessed 12 October 2026
5. 5.VAT User Guide – Returns (August 2021) — Federal Tax Authority · accessed 12 October 2026
6. 6.Executive Regulation of the Tax Procedures Law (Cabinet Decision No. 74 of 2023) — Federal Tax Authority / Ministry of Finance · accessed 12 October 2026
7. 7.Cabinet Decision No. 129 of 2025 – Key amendments to UAE administrative penalties — Andersen UAE · accessed 12 October 2026
8. 8.UAE tax law changes take effect: administrative penalties and fines reduced — Gulf News · accessed 12 October 2026
9. 9.Cabinet Resolution No. 106 of 2025 on e-invoicing fines — UAE Ministry of Finance · accessed 12 October 2026