Cabinet Decision No. 129 of 2025 has reduced and simplified administrative penalties across VAT, excise, and corporate tax. Here’s what changed and what it means for your compliance position.
On 14 April 2026, Cabinet Decision No. 129 of 2025 came into force, amending the UAE’s original administrative penalty framework under Cabinet Decision No. 40 of 2017. The Federal Tax Authority has described the update as intended to support taxable persons, ease their financial burden, and encourage businesses to regularise their tax position.
What changed
- Several fixed penalties were reduced — for example, the fine for failing to submit tax records in Arabic upon request was cut from AED 20,000 to AED 5,000.
- Penalties for late payment, incorrect tax returns, and voluntary disclosures were simplified into a more proportionate structure based on how quickly an error is identified and corrected.
- The amendments apply across VAT, excise tax, and corporate tax, harmonising how penalties are calculated across tax types.
One nuance worth noting: while most changes reduce the overall penalty burden, certain voluntary disclosure scenarios may see penalties increase compared to the previous regime, depending on how long the error had gone uncorrected. This makes regular internal review and timely error correction more valuable than before, not less.
With the UAE’s e-invoicing mandate also approaching — which will give the FTA transaction-level visibility into invoicing on an ongoing basis — this is a good moment for businesses to review their record-keeping, error-correction, and voluntary disclosure procedures against the revised framework.
This summary is for general information purposes. Please speak to your tax advisor for more details
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