Significant Amendments to Administrative Tax Penalties
Date: 17 November 2025
On 9 October 2025, the UAE Cabinet issued Cabinet Decision No. 129 of 2025, introducing major amendments to Cabinet Decision No. 40 of 2017 on administrative penalties for violations of tax laws.
These changes take effect from 14 April 2026, replacing the frameworks introduced under Cabinet Decisions Nos. 49 and 108 of 2021, and aligning the penalty system with Federal Decree-Law No. 28 of 2022 on Tax Procedures.
“The amendments modernize the UAE’s administrative penalty framework, moving from a punitive, compounding model to a proportionate, transparent, and compliance-focused system. The aim is to encourage voluntary disclosure, improve predictability, and reduce excessive fines for minor errors.”
Key Amendments Introduced
- Alignment with the Updated Tax Procedures Law
- All legal references now follow Federal Decree-Law No. 28 of 2022, replacing references to the 2017 Tax Procedures Law.
- New defined terms include “Tax Assessment,” “Voluntary Disclosure,” and “Legal Representative” for uniform clarity across the tax system.
- Simplification and Reduction of Penalty Amounts
- Monetary penalties are adjusted to better reflect proportionality and distinguish between minor oversights and deliberate noncompliance.
Administrative Penalties: Old vs New
Violation | Old Penalty (49 & 108 of 2021) | New Penalty (129 of 2025) | Change / Impact |
Failure to keep required records | AED 10,000 first time; AED 20,000 repeat | AED 10,000 each violation; AED 20,000 if repeated within 24 months | Adds 24-month period for repeat violations |
Failure to submit records in Arabic | AED 20,000 | AED 5,000 | Significantly reduced |
Late registration | AED 10,000 | AED 10,000 | No change |
Late deregistration | AED 1,000 delay + monthly up to AED 10,000 | AED 1,000 monthly, max AED 10,000 | Same monthly structure |
Amendments to tax record | AED 5,000 first time; AED 10,000 repeat | AED 1,000 each; AED 5,000 repeat within 24 months | Reduced and timeframe clarified |
Legal Representative – notify appointment | AED 10,000 | AED 1,000 | Reduced tenfold |
Legal Representative – file Tax Return | AED 1,000 first time; AED 2,000 repeat | AED 1,000 first time; AED 2,000 repeat | No change |
Registrant – submit Tax Return | AED 1,000 first time; AED 2,000 repeat | AED 1,000 first time; AED 2,000 repeat | No change |
Failure to pay Tax | 2% next day + 4% monthly (up to 300%) | 14% per year (1.167% monthly) | Simplified calculation; reduced overall |
Incorrect Tax Return | AED 1,000 first time; AED 2,000 repeat | AED 500 unless corrected promptly | Penalty lowered; waived for prompt correction |
Voluntary Disclosure | Tiered: 5–40% over years | 1% monthly on Tax Difference | Simplified; encourages self-correction |
Late voluntary disclosure (before audit) | 50% fixed + 4% monthly | 15% fixed + 1% monthly | Significantly reduced |
Obstructing Tax Auditor | AED 20,000 | AED 20,000 (applies to person, legal rep, or tax agent) | Clarified liability scope |
Failure to calculate tax on behalf of another | 2% + 4% monthly (max 300%) | 14% per year (monthly accrual) | Simplified and lower overall |
Excise: display prices inclusive of tax | AED 5,000 | AED 5,000 | No change |
VAT: issue Tax Invoice | AED 2,500 per case | AED 2,500 per case (timeframe clarified) | No change; clarified timeframe |
Overall Impact for Businesses
- Reduced Administrative Burden: Clearer penalty structures make compliance simpler.
- Predictable Penalties: Time-based rates allow easier forecasting and accounting.
- Incentives for Voluntary Correction: Proportionate penalties encourage businesses to fix errors proactively.
- Improved Legal Clarity: Defined terms and objection mechanisms add transparency.
- Simplified Compliance Management: Legacy relief schemes removed.
Cabinet Decision No. 129 of 2025 strengthens fairness, transparency, and proportionality in the UAE’s tax system, helping businesses comply without unnecessary risk.
How Rasif Accountants Can Help
We help businesses navigate these new rules:
- Compliance Review: Check your current tax processes against the new framework.
- Penalty Risk Assessment: Identify exposure and take corrective actions.
- Voluntary Disclosure Support: Guide you through disclosure calculations and submissions.
- Corporate Tax Registration Advisory: Ensure timely registration and benefit from applicable waivers.
Next Steps:
Businesses should review tax compliance procedures, update voluntary disclosure policies, and ensure readiness before April 2026 to take advantage of the revised framework.
For assistance, contact Rasif Accountants today to safeguard your business and stay fully compliant.
Disclaimer: This content is for general informational purposes and does not constitute legal or tax advice. Consult a professional for advice specific to your situation.
