Update on Penalty pursuant to recent Cabinet Decisions
 

The Federal Tax Authority issued revised administrative penalties through Cabinet Decision No. 129 of 2025 applicable to violations of tax laws in the UAE. The amended penalties will take effect on 14 April 2026. Below we compare the revised penalties with those penalties previously in force, focusing on the amended provisions.

Sr. No. of the table	Nature of Violation	Cabinet Decision No. 108 of 2021	Cabinet Decision No. 129 of 2025	Nexdigm comments
1	Failure to keep required records and information	An administrative penalty of AED 10,000 was imposed upon commission of the violation for the first time, increasing to AED 20,000 in the event of repetition	An administrative penalty of AED 10,000 is imposed for each violation, with a penalty of AED 20,000 applicable where a repeated violation occurs within 24 months from the date of the last violation	Penalty framework clarified to apply on a per-violation basis, with a defined repetition period
2	Failure to submit records and documents in Arabic when requested	A fixed administrative penalty of AED 20,000 was imposed	A fixed administrative penalty of AED 5,000 is imposed	Substantial reduction in the prescribed penalty amount
5	Failure to amend tax registration details	An administrative penalty of AED 5,000 was imposed for the first violation, increasing to AED 10,000 in the case of repetition	An administrative penalty of AED 1,000 is imposed for each violation, increasing to AED 5,000 where a repeated violation occurs within 24 months	Reduction in the base penalty and clarification of repetition criteria
9	Late payment of payable tax	2% day after due date + 4% monthly (max 300%)	14% per annum penalty (applied monthly on unpaid tax after the due date)	Significant Reduction in the actual rate applicable for late payment of tax
10	Submission of an incorrect Tax Return	Administrative penalties were imposed unless the Registrant corrected the Tax Return within the prescribed timeframe or satisfied specified conditions	A fixed administrative penalty of AED 500 is imposed, which does not apply where the Tax Return is corrected within the prescribed deadline or where the correction does not result in a tax difference	Shift towards a corrective and compliance-oriented penalty framework
11	Voluntary disclosure of errors	A penalty ranging from 5 percent to 40 percent of the tax difference was imposed, depending on the timing of submission of the voluntary disclosure	A monthly penalty of 1 percent of the tax difference is imposed	Replacement of a graduated penalty regime with a simplified monthly penalty
12	Failure to submit voluntary disclosure prior to being notified of a tax audit	A fixed penalty of 50 percent of the tax difference was imposed, together with additional monthly penalties	A fixed penalty of 15 percent of the tax difference is imposed, together with a monthly penalty of 1 percent	Significant reduction in the fixed penalty component

 
The amendments in the highlighted provisions indicate a recalibration of the administrative penalties framework. They are characterized by reduced fixed penalties for procedural non-compliance. The amendments offer increased clarity around repeated violations, and place greater emphasis on voluntary compliance and timely correction.