Corporate Tax Penalties in the UAE

Article 2 of Cabinet Decision No. 75 of 2023 is the sentence that decides which table you are reading: notwithstanding Cabinet Decision No. 40 of 2017, the penalties in the schedule annexed to this Decision apply to violations related to the application of the Corporate Tax Law.

So there are two parallel schedules in UAE tax, and the amounts differ item by item. Cabinet Decision No. 40 of 2017, as rewritten by Cabinet Decision No. 129 of 2025 from 14 April 2026, prices violations of the VAT and Excise Tax laws and of the Tax Procedures Law generally. Cabinet Decision No. 75 of 2023 prices violations of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses. Article 4 brought it into effect on 1 August 2023.

The two are close enough to be confused and different enough to matter. A late return costs a flat AED 1,000 under VAT and AED 500 a month escalating to AED 1,000 a month under corporate tax. An incorrect return costs AED 500 under both — but the escapes differ, as set out below. And the 14% per annum late payment charge that arrived in the VAT table only on 14 April 2026 has been in the corporate tax table since 1 August 2023. Cabinet Decision No. 129 of 2025 did not change corporate tax; it brought VAT into line with it.

One clarification worth making early, because the query behind it is common: these are administrative penalties. Tax evasion is a criminal matter dealt with under Articles 25 to 27 of the Tax Procedures Law, and it is not part of this table.

All fourteen items below were read in the consolidated Ministry of Finance publication of Cabinet Decision No. 75 of 2023 and its amendments on 21 August 2026. Amounts are in dirhams.

Items 5 and 6 deserve a note because they are easy to miss: they fall on the legal representative personally, and the Decision says so — "the penalties will be due from the Legal Representative's own funds". Item 12 does the same to a person, a legal representative or a tax agent who fails to facilitate a tax auditor.

Item 13 covers declarations rather than returns. It is the item that reaches an exempt person required to file an annual declaration, and it is priced identically to the return penalty in item 7.

A penalty is not invoiced separately from the tax. It lands on the taxable person's account in EmaraTax as part of the balance owed to the Federal Tax Authority, and it is settled through the same payment channels the platform offers for corporate tax itself.

Two rules from the Tax Procedures Law shape how a payment is applied, and they change what actually gets cleared.

Article 9(1) requires you, when paying any amount to the Authority, to specify the type of tax and the tax period the amount relates to; the Authority then allocates it accordingly. Article 9(2) is the consequence of not doing so: where a payment arrives without that specification, the Authority has the right to allocate all or part of it against tax or amounts due as specified in the Executive Regulation. An unallocated payment is therefore the Authority's to place, not yours.

Article 9(3) points the other way and is useful: where you have overpaid or hold a credit balance, the Authority may allocate that balance to settle tax or liabilities owed to it, within five years from the end of the relevant tax period. A sitting credit can absorb a penalty.

One thing paying does not do. Article 24(5) provides that imposing an administrative penalty does not exempt any person from settling the payable tax. Paying the penalty and leaving the tax outstanding simply leaves item 8 running on the tax.

Item 8 reads: "A monthly penalty of 14% per annum, for each month or part thereof, on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter."

Three points are settled by that text. The base is the unsettled tax, so part payments reduce what the next month is calculated on. The clock starts the day after the due date and re-imposes on that same calendar date monthly. And a part month engages a whole cycle.

Item 8(2) then redefines the due date in two situations, and this is the practically important half. For tax payable under a voluntary disclosure the due date is 20 business days from the date of submission. For tax payable under a tax assessment it is 20 business days from the date of receipt. Pay inside that window and item 8 never bites on that amount.

What the Decision does not say is how an annual percentage becomes the monthly figure the Authority charges. Divide by twelve; accrue daily and bill at the anniversary; or charge a part month at the full annual proportion — all three are consistent with the words as published, and they do not give the same answer. No Authority worked example has been located. This page therefore states 14% of the unsettled tax as a one-year reference figure only, and says plainly that the month-by-month conversion is unpublished.

Items 10 and 11 are the same violation seen from two sides, and the gap between them is the clearest financial incentive in the schedule.

Disclose an error yourself, before the Authority notifies you of an audit, and item 10 charges 1% of the tax difference for each month or part month, running from the day after the due date of the relevant return — or the refund application, or notification of the assessment — until the date the disclosure is submitted.

Fail to disclose before that notification and item 11 adds a fixed 15% of the tax difference on top of the same 1% monthly charge. Item 11 also spells out where the monthly element stops in each case: where a disclosure is made after audit notification, it runs to the date of the disclosure; where no disclosure is made at all, it runs to the date the tax assessment is issued.

One asymmetry with VAT is worth knowing because it is counter-intuitive. Item 9 of this schedule lets a registrant escape the AED 500 incorrect-return penalty only by correcting the return before the filing deadline. The equivalent VAT item allows a second escape — a voluntary disclosure that produces no difference in due tax. Read literally, a nil-difference disclosure rescues a VAT return and not a corporate tax one.

There is also a threshold below which no disclosure is needed at all: the FTA's corporate tax returns guide provides a field in the return for a prior-period error of AED 10,000 or less. Where a prior period holds more than one error it is the aggregate impact that must be within the threshold, and the field is not shown in a first tax period's return.

A penalty you believe is wrong is challenged, not negotiated. The route is the same staged ladder that applies to every FTA decision.

Article 24(1) of the Tax Procedures Law requires the Authority to issue an administrative penalties assessment and notify you of it within 5 business days for the listed violations. That notification is what starts your clock.

From there, Article 29 gives 40 business days from notification to file a reconsideration request setting out reasons, and the Authority 40 business days to decide plus 5 to notify. Where the penalty came attached to a tax assessment, Article 28 offers an alternative first step — a tax assessment review request on the same 40-business-day timing — and choosing it preserves a fresh reconsideration window afterwards. The two cannot run at once.

If the reconsideration is refused, Article 32 allows an objection to the Tax Disputes Resolution Committee within 40 business days, but only if a reconsideration was filed first and the tax is paid in full. The Committee decides within 20 business days and its decision is final where the total tax and penalties do not exceed AED 100,000.

One general limit applies throughout: Article 24(4) provides that the amount of any administrative penalty shall not exceed two times the amount of tax in respect of which the penalties assessment was issued.

Where you accept the penalty but cannot pay it, or where the circumstances were exceptional, Article 50 of the Tax Procedures Law is the route. Note the number — Article 46 is the statute of limitation and is very commonly cited for this in error.

Article 50(1) empowers a committee, formed by the Chairman of the Authority's Board and chaired by him or his deputy with two Board members, to approve payment by instalments or a total or partial waiver or refund of a penalty, on the Director General's presentation and under Cabinet controls. Those controls are Cabinet Decision No. 105 of 2021. The FTA's service card states the request is free of charge, is decided "within a period not exceeding 110 business days from the date of receipt of the request", and requires an undertaking where instalments are sought. No approval rate is published, and any percentage quoted to you is invented.

Separately from Article 50 there is a targeted initiative for the late-registration penalty, published on the Authority's waiver of penalties page. It is not part of Cabinet Decision No. 75 of 2023 and never has been. The condition is that the taxable person files its first tax return — or, for an exempt person, its first annual declaration — within seven months of the end of its first tax period, rather than the usual nine. The page sets out five scenarios; two of them are refunds of a penalty already paid rather than non-collection. It is not automatic, it does not touch items 7 or 8, and the amount is not stated in the body of that page.

A monthly percentage for item 8. The Decision publishes an annual rate applied monthly and no conversion. Presenting a per-month number would be our arithmetic dressed as the Cabinet's rule.

A total exposure for your situation. Several items commonly run on the same period — a late registration, a late return, unsettled tax and an undisclosed error can all be live at once — and Article 24(4) then applies to the result. That is an account balance, not a formula.

Any waiver or instalment approval rate, or any prediction of whether a request will succeed. Nothing is published.

A rate of interest, a compounding assumption, or a date from which the schedule applied retroactively. Article 4 puts the Decision into effect on 1 August 2023 and Cabinet Decision No. 10 of 2024 applies item 14 from 1 March 2024; nothing here reaches behind those dates.

Everything above was read on 21 August 2026 in the Ministry of Finance publication of Cabinet Decision No. 75 of 2023 and its amendments, and in the consolidated Tax Procedures Law, both linked below.