Businesses registered for value added tax and excise tax in the UAE will face significantly lower fines under a new set of administrative penalty reforms that officially took effect on April 14.
The Federal Tax Authority confirmed that Cabinet Decision No. 129 of 2025 — which amends select provisions of Cabinet Decision No. 40 of 2017 — is now in force, with the stated aim of helping taxable persons correct errors, update records, and regularise their tax positions with greater ease.
Among the most notable reductions: the penalty for failing to provide the FTA with Arabic-language tax documents upon request has dropped from AED 20,000 to AED 5,000. The fine for legal representatives who miss the deadline to notify the FTA of their appointment has been cut from AED 10,000 to AED 1,000 — payable from the representative’s own funds.
Penalties tied to a registrant’s failure to update tax record information have also been restructured. Previously set at AED 5,000 for a first offence and AED 10,000 for repeat violations, the revised framework imposes AED 1,000 per violation and AED 5,000 for the same violation repeated within 24 months of the last recorded breach.
FTA Director General Abdulaziz Mohammed Al Mulla said the changes reflect the leadership’s commitment to international tax standards. “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.”
Al Mulla also urged businesses currently in breach of tax rules to act now. “We call on tax registrants, where violations of tax legislation exist, to benefit from the significant advantages provided by the decision, which introduces further facilitations aimed at reducing the tax burden on business sectors, thereby enabling them to strengthen their pivotal role in reinforcing the UAE’s leading position as a global financial and economic centre,” he said.
The reforms extend to a broader range of violations under three key pieces of legislation: the Federal Decree-Laws on Tax Procedures, Excise Tax, and Value Added Tax. Covered violations include late tax payments, submission of incorrect tax returns, voluntary disclosure filings related to errors in tax returns or refund applications, failure to submit voluntary disclosures before an audit notification, and a registrant’s failure to account for tax on behalf of another party as required by law.
