VAT Late Payment Penalty in the UAE

The charge in item 9 attaches to a failure to settle the payable tax "within the timeframe specified in the Tax Law" — not to a failure to file. Read that phrase carefully, because it is the whole of the trigger.

For an ordinary VAT return the two dates coincide: the return and the payment are both due by the 28th day following the end of the tax period. That is why most readers experience one deadline. But the return deadline and the payment deadline are separate legal obligations carrying separate penalties, and there are three situations in which they come apart.

The first is a return filed on time and paid late — very common where a business files to stop the AED 1,000 filing penalty and then waits for cash. Item 8 is not triggered; item 9 is, from the day after the due date. The second is a voluntary disclosure, where the tax it declares gets its own due date rather than inheriting the original one. The third is a tax assessment raised by the Authority, which does the same. Both are set out below.

One further rule moves the date itself. Article 49(2) of Federal Decree-Law No. 28 of 2022 provides that where the last day of a time period is not a business day, the period extends to the next business day, and Article 1 defines a business day as any day other than weekends and official federal government holidays. Article 49(1) excludes the day of the event from the count and Article 49(3) forces the Gregorian calendar. Nothing in the VAT Executive Regulation says this, which is why pages written only from that Regulation conclude, wrongly, that no extension exists.

Item 9 of Table 1, as amended, prices the violation as "a monthly penalty of (14%) per annum, for each month or part thereof, imposed on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter."

Three things follow directly from that wording, and are safe to rely on.

The base is the unsettled payable tax. It is not the original liability. Pay part of what you owe and the base for the following month falls to what is still outstanding, so a partial payment is worth making even when you cannot clear the balance.

The clock starts the day after the due date, not on the due date, and it re-imposes on that same calendar date each month. A liability due on the 28th is charged on the 29th and then on the 29th of every following month.

"Each month or part thereof" means the charge is not pro-rated by days within a month. Being three days into a new monthly cycle engages that cycle.

What the sentence does not settle is how a stated annual rate becomes a monthly amount. Three readings are each consistent with the words as published: an annual rate divided by twelve; daily accrual billed at the monthly anniversary; or a part-month charged as a whole month at the full annual proportion. The Authority has published no worked example resolving them, and this page does not pick one.

Until 14 April 2026 the late payment charge was structured completely differently: an immediate percentage on the day after the due date, a further percentage a week later, and then a monthly percentage running to a cap of 300% of the unpaid tax. That structure came from Cabinet Decision No. 49 of 2021. Cabinet Decision No. 129 of 2025, issued 9 October 2025, replaced Table 1 outright and put a single 14% per annum monthly charge in its place from 14 April 2026.

The practical consequence is that the 300% cap is gone. Nothing in the amended table caps item 9, and the only ceiling now operating is the general one in Article 24(4) of the Tax Procedures Law, described further down.

There is a real defect here, and any page that glosses over it is guessing. Cabinet Decision No. 129 of 2025 publishes no transitional rule for an exposure that straddles 14 April 2026. Read in the consolidated text: the effective-date block gives the date, Tables 1 and 3 carry the amendment footnote, and Article 7 on coming into effect still recites only the original 2017 and 2018 dates. Nothing states whether months that accrued under the old formula before that date are re-rated at 14% or left as they stood. No Authority guidance settling the point could be found when this page was checked on 21 August 2026.

So if your exposure began before 14 April 2026 and continued after it, this page will not tell you what the earlier months cost. Read the figure off the EmaraTax ledger and, if it matters, ask the Authority in writing.

Item 9(2) is the part most often missed, and it is the part that decides when a correction becomes expensive.

Where tax becomes payable through a voluntary disclosure, the due date for the purposes of this penalty is 20 business days from the date the disclosure is submitted. Where it becomes payable through a tax assessment issued by the Authority, the due date is 20 business days from the date the assessment is received. In both cases the 14% clock starts the day after that date, not the day after the original return deadline.

That matters in two directions. It means a disclosure does not retroactively expose you to months of late payment penalty on the newly declared tax — that gap is priced separately, by the 1% per month in item 11. And it means the 20 business days are a genuine grace period: submit the disclosure, pay within the window, and item 9 never engages on that amount at all.

Business days, not calendar days. Weekends and official federal government holidays are excluded by Article 1 of the Tax Procedures Law.

With the 300% cap withdrawn, the only published ceiling on an accruing VAT late payment penalty is Article 24(4) of Federal Decree-Law No. 28 of 2022, as amended by Federal Decree-Law No. 17 of 2024: "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."

Read the limit precisely. It is expressed against the tax in the administrative penalties assessment, and it caps the amount of an administrative penalty. It is not a self-evidently identical rule to a 300% cap on one item of one table, and the Authority has published no worked example of how it interacts with several concurrent items on the same period. This page therefore states the article and its words, and does not convert it into a number for your situation.

One consequence is worth carrying anyway. Because Article 24(4) is anchored to the tax, an accrual on a large unpaid liability reaches a far larger absolute ceiling than one on a small liability, and a nil or trivial liability cannot generate a large item 9 charge at all — there is nothing unsettled for the percentage to bite on.

Three routes exist once a late payment penalty is on the ledger, and they are not alternatives to paying the tax.

Article 50 of the Tax Procedures Law gives a committee formed by the Chairman of the Authority's Board the power, on the Director General's presentation, to approve payment of a penalty by instalments or to waive or refund it in whole or in part, under controls issued by the Cabinet. The controls are in Cabinet Decision No. 105 of 2021. Note the article number: Article 46 is the statute of limitation and is routinely cited for this by mistake.

The Authority's own service card for instalment, waiver and refund requests states the service is free of charge and that a request is decided "within a period not exceeding 110 business days from the date of receipt of the request", with an undertaking required where an instalment plan is sought. No approval rate or success rate is published anywhere, so treat any percentage you are quoted as unsourced.

If the penalty itself rests on a decision you think is wrong — an assessment, an estimate, a penalties assessment — the answer is not a waiver request but a reconsideration, and that has a hard 40 business day deadline from notification.

A monthly percentage figure. The table publishes an annual rate applied monthly and no conversion. Multiplying 14% by anything to reach a per-month number would be our arithmetic presented as the Authority's rule.

What the months before 14 April 2026 cost on a straddling liability. Cabinet Decision No. 129 of 2025 contains no transitional provision and no guidance resolving it was found on 21 August 2026.

A total penalty for your situation. Item 9 rarely runs alone; item 8, item 10 and items 11 or 12 commonly sit on the same period, and Article 24(4) then applies to the result. That is an account balance, not a formula.

Any waiver or instalment success rate. None is published.

Where a figure below is not in the primary text, it is not on this page. Everything above was read in the consolidated Cabinet Decision No. 40 of 2017 and the consolidated Tax Procedures Law on 21 August 2026, both linked in the sources.