Penalties & Disputes in the UAE

There is no single UAE tax penalty law. There is a procedural statute that says when a penalty may be assessed and how you argue about it, and then three separate Cabinet decisions that set the amounts for different taxes. Getting the right schedule is the first thing to get right, because the same conduct carries different numbers depending on which tax it touches.

The procedural statute is Federal Decree-Law No. 28 of 2022 on Tax Procedures, amended by Federal Decree-Law No. 17 of 2024 and again by Federal Decree-Law No. 17 of 2025, whose amendments took effect on 1 January 2026. It defines the tax assessment, the administrative penalties assessment, the audit powers, the limitation periods, the dispute route and the criminal offences. It does not itself set a single dirham amount. Article 24(3) hands that job to the Cabinet.

Two provisions of that statute apply to every penalty on this page and are worth knowing before any of the amounts. Article 24(4) says the amount of any administrative penalty shall not exceed two times the amount of tax in respect of which the administrative penalties assessment was issued. Article 24(5), and Article 3 of Cabinet Decision No. 40 of 2017, both say the same thing from opposite directions: paying a penalty does not discharge the tax, and owing the tax does not extinguish the penalty. They are two separate debts to the Federal Tax Authority.

This is the part of UAE tax that has moved most recently, and it is where competitor pages are most often stale. Cabinet Decision No. 129 of 2025 was issued on 9 October 2025 and took effect on 14 April 2026. It rewrote Table 1 and Table 3 of Cabinet Decision No. 40 of 2017, which are the tables that carry the VAT and Tax Procedures penalties. Statement checked against the consolidated text published by the Ministry of Finance on 21 August 2026.

The headline change is late payment. Under the schedule that Cabinet Decision No. 49 of 2021 put in place, a late payer owed 2% of the unpaid tax on the day following the due date, then a 4% monthly penalty from one month after the due date and on the same date each month thereafter, capped at 300% of the unpaid tax. That formula is gone. The current text imposes a monthly penalty of 14% per annum, for each month or part of a month, on the unsettled payable tax from the day following the due date and on the same date monthly thereafter. There is no express percentage cap in the replacement text.

The corporate tax schedule never used the old formula. Cabinet Decision No. 75 of 2023 has expressed its late payment penalty as 14% per annum since it came into force on 1 August 2023, so what happened in April 2026 was VAT and excise being brought into line with corporate tax, not a new rate being invented.

The amendment also fixed the due date that the clock runs from in the two cases where it used to be argued about. For a voluntary disclosure, payment is due 20 business days from the date of submission. For a tax assessment, it is 20 business days from the date of receipt. Both schedules now say this in identical words.

These amounts come from the table annexed to Cabinet Decision No. 75 of 2023, in the consolidated version published by the Ministry of Finance that incorporates Cabinet Decision No. 10 of 2024. They apply only to violations of Federal Decree-Law No. 47 of 2022. Article 2 of the decision says so expressly: it displaces Cabinet Decision No. 40 of 2017 for corporate tax purposes.

One structural point is easy to miss. Where a penalty repeats monthly, Article 3 of the decision fixes the anniversary date: if a month has no corresponding date, the penalty falls on the last day of that month, and every other month uses the date on which the monthly penalty was first imposed. That is how a single missed filing turns into a compounding line on the EmaraTax ledger rather than a one-off charge.

The decision carries three tables and the distinction between them decides which penalty you are arguing about. Table 1 covers violations of the Tax Procedures Law and therefore applies to VAT and excise alike, which is where registration, filing, payment, records and voluntary disclosure sit. Table 2 is excise-specific. Table 3 is VAT-specific. Tables 1 and 3 were amended by Cabinet Decision No. 129 of 2025 with effect from 14 April 2026; Table 2 was last amended by Cabinet Decision No. 49 of 2021.

A point that costs businesses money every quarter: filing and paying are two separate obligations that share one deadline. A VAT return filed on the 28th but paid on the 30th attracts no late filing penalty and a full late payment penalty. The reverse is also true, which is why filing a nil or estimated return on time is almost never worse than filing nothing.

Cabinet Decision No. 106 of 2025 came into force on 15 October 2025, well before the invoicing mandate itself starts to bite. It is a separate schedule from the VAT one, and its penalties are structured around days and documents rather than tax amounts, so a business that never underpays a dirham of tax can still accumulate a real liability by being late with system changes.

Because the exchange obligation is per document, the two AED 100 penalties are capped at AED 5,000 in a calendar month each, which is the closest thing to a ceiling anywhere in the UAE penalty regime.

The arithmetic in both schedules is deliberately lopsided. Disclose an understatement yourself and you pay 1% of the tax difference per month. Fail to disclose it before the FTA notifies you of an audit and you pay a fixed 15% of the tax difference on top of that 1% per month, and the monthly charge runs all the way to the date the assessment is issued rather than stopping at the date you owned up.

When a voluntary disclosure is required is set by Article 10 of the Tax Procedures Law and Article 10 of its Executive Regulation. If a return or assessment understated payable tax by more than AED 10,000, you must file a voluntary disclosure within 20 business days of becoming aware of the error. If the amount is AED 10,000 or less, you correct it in the next return that has not yet fallen due, or in the return for the period in which you found it, whichever comes first, and you only file a disclosure if there is no return through which the correction can be made.

Federal Decree-Law No. 17 of 2025 softened one edge of this from 1 January 2026. Where the error makes no difference to the tax due, Article 10(5) no longer forces a voluntary disclosure in every case: you correct it by disclosure where the FTA specifies, and through a tax return in any other case.

There is an outer limit. Article 46(6) of the Tax Procedures Law bars a voluntary disclosure more than five years after the end of the relevant tax period, with a narrow exception for disclosures about a refund application on which the FTA has not yet decided. Note the clause number: the 2025 amendment inserted a new clause into Article 46, so the bar that used to be cited as Article 46(5) is now Article 46(6).

The UAE runs a compulsory ladder. You cannot go to the Tax Disputes Resolution Committee without having asked the FTA to reconsider first, and you cannot go to court without having been to the Committee. Article 33(4) of the Tax Procedures Law puts it in one sentence: in all cases, tax disputes will not be accepted before the competent court if an objection has not previously been submitted to the Committee.

Every deadline below is expressed in business days, not calendar days, and Article 49 sets three rules for counting them. The day of notification is excluded. If the last day is not a business day, the period runs to the next business day. And all periods are calculated on the Gregorian calendar.

Two gates control access to the later stages, and both are financial. An objection to the Committee is not accepted unless the tax connected with the objection has been paid in full. An appeal to the court is inadmissible unless the taxpayer proves settlement of the full tax and settlement of at least 50% of the administrative penalties determined by the Committee or the court, either in cash or by an approved bank guarantee in the FTA's favour.

This is the provision most often cited wrongly. The power to waive, refund or instalment an administrative penalty is Article 50 of Federal Decree-Law No. 28 of 2022, not Article 46. Article 46 is the statute of limitation and does something entirely different. The confusion is widespread enough that it is worth checking any adviser who cites Article 46 for a waiver.

Article 50 does not decide anything itself. It creates a committee chaired by the Chairman of the FTA board or his deputy, with two board members, and sends the substance to a Cabinet decision. That decision is Cabinet Decision No. 105 of 2021, in force since 1 March 2022, and it is still the instrument the FTA's own service card points to as at 21 August 2026. Read it with one eye open: it is drafted against Federal Law No. 7 of 2017 on Tax Procedures, which Article 55 of the current Decree-Law repealed. The FTA continues to administer it, and the service card confirms it, but the cross-references inside it point at a law that no longer exists.

Instalments and waiver are governed separately. For instalments, Article 3 requires that the penalties are unsettled, that they total at least AED 50,000, that they are not under dispute before the Committee or the courts, and that you owe no payable tax for the period concerned. For a waiver, Article 4 requires that the violation was not connected to a tax evasion crime, that the request is made within the period the committee specifies, and that the facts fall into one of nine listed cases.

Everything above is administrative. Tax evasion is a crime, tried in court, and Article 25 of the Tax Procedures Law sets the sentences. It is not a bigger version of a penalty: the burden of proof shifts. Article 51 puts the burden of proving the accuracy of a return on the taxable person, but places the burden of proof in cases of tax evasion on the FTA.

A prison sentence and a monetary penalty of not less than the evaded tax and not more than three times it, or either of the two, apply to deliberately failing to settle payable tax; deliberately understating the value of a business or its revenues, or failing to consolidate related businesses, to stay below a registration threshold, tax rate or other threshold; deliberately charging and collecting amounts as tax while unregistered; and deliberately decreasing due tax or participating in evasion in any form. Deliberately failing to settle a due administrative penalty carries a prison sentence and a fine of not less than that penalty and not more than three times it.

A separate tier, with a prison sentence and a fine of up to AED 1,000,000, applies to deliberately giving the FTA false information or documents, deliberately concealing or destroying material you are required to keep, stealing or destroying the FTA's own documents, and deliberately obstructing FTA employees. If any of those acts results in evasion, or facilitates or conceals it, the heavier evasion penalty applies instead.

Three consequences are worth knowing. Anyone who participated in an evasion crime is jointly and severally liable with the person they helped for the tax and the penalties. Reoffending within five years of a final judgment is an aggravating circumstance. And on conviction the court may, at the FTA's request through the Public Prosecution, order the judgment or a summary of it published at the convicted person's expense.

Article 46 of the Tax Procedures Law, as amended by Federal Decree-Law No. 17 of 2025, is the outer boundary of the whole system. The general rule is five years: the FTA may not conduct a tax audit or issue a tax assessment more than five years after the end of the relevant tax period. Four exceptions extend it, and two of those extend it a very long way.

If you were notified that an audit had started before the five years expired, the FTA has four years from the date of that notification to complete it or issue the assessment. If the audit or assessment relates to a voluntary disclosure submitted in the fifth year, the FTA has one year from the disclosure. The 2025 amendment added a third case: where the audit or assessment relates to a refund application or credit balance claim submitted in the fifth year, the FTA has two years from the date of the refund application. And in cases of tax evasion, or of failure to register at all, the period is fifteen years, running from the end of the tax period in which the evasion occurred or from the date registration should have happened.

One asymmetry deserves emphasis, because it undercuts the idea that liabilities age out. Article 47 says payable tax and administrative penalties of which the taxable person has already been notified do not lapse with time, and the FTA may claim them at any time. The limitation period bars a fresh audit or assessment; it does not extinguish a debt you have already been told about.

Searches for new FTA charges in 2026 usually land on penalty pages, but the fee schedule changed in its own right and the change is small and specific. Cabinet Decision No. 174 of 2025, issued 18 November 2025, amended Cabinet Decision No. 65 of 2020 on fees for services provided by the Federal Tax Authority with effect from 1 January 2026.

Two fees were added, both for advance pricing agreements: AED 30,000 for a request to conclude a unilateral advance pricing agreement for the first time, and AED 15,000 for a request to renew or amend one. Two fees were removed: the FTA announced that the fees for issuing a certified paper tax registration certificate and a certified paper warehouse keeper registration certificate were cancelled, and that it now issues free electronic registration certificates carrying a QR code for verification.

Nothing in that decision is a penalty, and nothing in the penalty decisions is a fee. The distinction is practical: a private clarification fee can be refunded where the FTA does not issue the clarification, whereas a penalty can only be waived through the Article 50 committee. And there is no fee at all for the routes that matter most on this page. The waiver and instalment request is free. The fee table sets no charge for a reconsideration request or for an objection to the Tax Disputes Resolution Committee.

Every figure above was read from the primary instrument, and the instruments themselves are listed in the sources below. Where a number circulates widely but could not be traced to an official text, it is left out on purpose, and it is more useful to say so than to guess.

We do not state a monthly percentage for the late payment penalty, because the decision expresses the rate annually and publishes no conversion. We do not restate Cabinet Decision No. 108 of 2021 or Cabinet Decision No. 17 of 2026 as standalone texts, because the Ministry of Finance does not publish either separately. Both are readable in consolidation: Cabinet Decision No. 108 of 2021 is carried on the cover of the consolidated Cabinet Decision No. 40 of 2017, and Cabinet Decision No. 17 of 2026 is footnoted into the consolidated Cabinet Decision No. 74 of 2023 published 1 April 2026, which is the text the Executive Regulation figures above were read from on 21 August 2026. We do not publish a reward rate for reporting tax evasion, because the FTA does not publish one. We do not state a current penalty for late renewal of a trade licence, because that is a licensing authority matter and not an FTA penalty at all. The AED 200 per month figure that circulates for Dubai licence renewals does have a legislative basis — item 6 of Schedule 2 to Dubai Executive Council Resolution No. 13 of 2011, "Delay in renewing the licence, AED 200.00 per month, a part of a month rounded up to a full month", alongside item 5 at AED 250 for failing to renew within the prescribed period — but that is a 2011 basis and not a current price list: the Department of Economy and Tourism now prices per activity. Treat the number as legislative history and get the current figure from DET. And we do not tell you what your own exposure is: the assessed amounts are on your EmaraTax ledger, and that ledger is the only authoritative figure.

This section, and every amount on this page, was checked against the consolidated texts published by the Ministry of Finance and the Federal Tax Authority on 21 August 2026. Penalties change more often than rates do. Before you rely on any figure here, open the linked instrument and read the effective-date line at the top of it.