The UAE's tax authority on Wednesday announced updated penalty rules that lower some fines and make tax filing rules easier and more flexible for businesses and taxpayers in the Emirates.
The Federal Tax Authority (FTA) announced that new rules under Cabinet Decision No. (129) of 2025 took effect on Tuesday, April 14. The decision updates fines and penalties for violations of UAE tax laws, replacing parts of the rules in Cabinet Decision No. (40) of 2017.
The amendments introduce reduced or revised administrative penalties across Value Added Tax (VAT), Excise Tax, and tax procedures regulations. They focus on encouraging voluntary compliance and timely updates to tax records.
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Reduced penalties across VAT and excise tax
According to the FTA, key changes include reducing the penalty for failing to submit Arabic-language tax records upon request from Dh20,000 to Dh5,000. The penalty for failing to notify the authority of changes requiring updates to tax records is now Dh1,000 per violation, rising to Dh5,000 for repeat offences within 24 months.
The penalty for a legal representative failing to notify the FTA of their appointment has been reduced from Dh10,000 to Dh1,000, payable from the representative’s own funds.
The FTA also confirmed revisions to penalties for late tax payments, incorrect tax returns, and voluntary disclosures, including cases where taxpayers correct errors before or after a tax audit notification.
Easier compliance and voluntary correction
The authority said the updated framework is designed to support taxpayers, ease compliance burdens, and encourage voluntary correction of tax errors. This aligns with efforts to enhance the UAE’s ease of doing business and tax competitiveness.
Abdulaziz Mohammed Al Mulla, Director General of the Federal Tax Authority, said, “The new amendment, which includes reductions in a number of administrative penalties imposed for violations of tax laws, comes within the framework of the wise leadership’s directives to implement the tax system in accordance with international best practices, in order to preserve the strong and sustained growth of the national economy and enhance transparency through establishing an ideal tax legislative environment characterised by flexibility and responsiveness to change, supported by continuous review and the sustainable development of tax legislation in line with evolving requirements."
He added, “The amendments support taxable persons in achieving voluntary compliance and rectifying their positions where violations exist. They also encourage registrants to notify the Authority of any cases requiring amendments to their tax records. Additionally, they promote the prompt submission of voluntary disclosures where required, without exposure to significant financial penalties.”
