The United Arab Emirates has significantly strengthened its tax compliance and enforcement framework in recent years. With the enforcement of Corporate Tax, alongside continued regulation of Value Added Tax (VAT), Excise Tax, and the Tax Procedures Law, businesses operating in the UAE face increased scrutiny from the Federal Tax Authority (FTA).

Under Cabinet Decision No. 129 of 2025, effective 14 April 2026, and related Cabinet Decisions, updated administrative penalties apply to tax violations across all major tax regimes. These penalties are designed not only to discourage tax evasion but also to enforce procedural discipline, accurate reporting, and proper documentation.

This article provides a comprehensive, practical overview of all tax violations and administrative penalties, including official examples issued by the FTA, enabling businesses to fully understand their obligations and compliance risks.

 

1. Tax Procedures Law: Violations and Administrative Penalties

The Tax Procedures Law applies to all taxes administered by the FTA and governs record‑keeping, tax registration, deregistration, and the obligation to keep the Authority informed of changes.

 

1.1 Failure to Maintain Required Records and Information

Businesses are required to maintain accounting books, records, contracts, invoices, and all supporting documents specified under the tax laws.

Administrative Penalties:
  • AED 10,000 for the first violation
  • AED 20,000 for a repeated violation within 24 months
Example:

A taxable company complied with VAT, excise tax, and corporate tax filing deadlines. However, during a tax review, it was found that the company did not maintain proper stock count records and failed to retain written contracts for significant one‑off transactions, relying instead on verbal agreements. Despite filing accurate returns, the lack of documentation resulted in a penalty of AED 10,000, with higher penalties applicable if repeated.

 

1.2 Failure to Update Tax Records With the Authority

Registrants must notify the FTA of any changes to information held in their tax records, including changes to trade licenses or activities.

Administrative Penalties:
  • AED 1,000 for each violation
  • AED 5,000 for repeated violations within 24 months
Example:

A company added new activities to its trade license effective 1 January 2026 but failed to upload the updated trade certificate to EmaraTax within the legally prescribed timeframe. The delay constituted a breach of notification requirements and resulted in an AED 1,000 penalty.

 

1.3 Failure to Submit Deregistration Applications on Time

When a business ceases taxable or excisable activities or no longer meets registration criteria, it must apply for deregistration promptly.

Administrative Penalty:
  • AED 1,000 per month of delay
  • Maximum penalty of AED 10,000

This rule applies to VAT, Excise Tax, and Corporate Tax.

Examples:
  • A company stopped excisable activities but failed to deregister for excise tax, triggering monthly penalties.
  • Another business no longer met VAT registration criteria but delayed registration cancellation, incurring repeated penalties until deregistration was submitted.

 

2. Excise Tax Violations and Administrative Penalties

(Federal Decree‑Law No. 7 of 2017 & Cabinet Decision No. 49 of 2021)

Excise Tax applies to specific goods such as tobacco products, carbonated drinks, and energy drinks, with strict controls on pricing, storage, and movement.

 

2.1 Failure to Display Prices Inclusive of Excise Tax

Retailers must display a single, tax‑inclusive price for excise goods.

Administrative Penalty:
  • AED 5,000
Example:

A supermarket advertised tobacco products by listing base price, excise tax, and VAT separately instead of showing a total price inclusive of all taxes. This pricing method failed to meet legal requirements and resulted in a penalty.

 

2.2 Failure to Comply With Excise Goods Transfer and Storage Conditions

Excise goods transferred between designated zones must follow approved procedures and record‑keeping requirements.

Administrative Penalty:
  • Higher of AED 50,000, or
  • 50% of the excise tax chargeable on the goods
Example:

A company transferred excise goods between designated zones without complying with prescribed storage, security, and documentation requirements. The violation resulted in an administrative penalty calculated under the higher‑value rule.

 

2.3 Failure to Provide Price Lists for Excise Goods

Excise‑registered persons must submit price lists for the goods they produce, import, or sell.

Administrative Penalties:
  • AED 5,000 for the first violation
  • AED 10,000 for repeated violations
Example:

A registered excise taxpayer failed to provide price lists for its excise goods when requested by the FTA, resulting in a AED 5,000 penalty. Future repetitions would attract higher fines.

 

3. VAT Violations and Administrative Penalties

(Cabinet Decision No. 129 of 2025 – Effective from 14 April 2026)

VAT compliance remains one of the most frequently audited areas by the FTA.

 

3.1 Failure to Display VAT‑Inclusive Prices

VAT‑registered businesses must display prices inclusive of VAT and mandatory charges.

Administrative Penalty:
  • AED 5,000
Example:

A restaurant displayed menu prices exclusive of VAT and service charges, with only a footnote clarifying additional charges. This was deemed non‑compliant with VAT pricing regulations.

 

3.2 Failure to Notify Use of the VAT Margin Scheme

Businesses applying VAT under the margin scheme must notify the FTA before using it.

Administrative Penalty:
  • AED 2,500
Example:

A business selling second‑hand electronics applied VAT on the margin basis without prior notification to the FTA, triggering a procedural penalty even though VAT calculations were correct.

 

3.3 Non‑Compliance in VAT Designated Zones

Failure to meet conditions for storage or transfer of goods within VAT designated zones.

Administrative Penalty:
  • Higher of AED 50,000 or
  • 50% of the related tax
Example:

A VAT‑registered company stored goods in a designated zone but failed to comply with transfer procedures and invoicing requirements, resulting in a substantial penalty.

 

3.4 Failure to Issue Tax Invoices

Tax invoices or alternative documents must be issued within the legally specified timeframe.

Administrative Penalty:
  • AED 2,500 per detected case
Example:

An online retailer issued payment receipts instead of tax invoices following customer transactions, resulting in per‑case penalties.

 

3.5 Failure to Issue Tax Credit Notes

Tax credit notes must be issued when adjustments are required.

Administrative Penalty:
  • AED 2,500 per detected case
Example:

A trading company revised previously issued invoices but failed to issue tax credit notes within the required timeframe, attracting penalties per case.

 

4. Corporate Tax Violations and Administrative Penalties

(Cabinet Decision No. 75 of 2023 & Cabinet Decision No. 10 of 2024)

With Corporate Tax now in effect, compliance failures carry both financial and governance consequences.

 

4.1 Late Filing of Corporate Tax Returns by Legal Representatives

Failure by a legal representative to submit a corporate tax return on time.

Administrative Penalties:
  • AED 500 per month (first 12 months)
  • AED 1,000 per month thereafter

Penalties are payable from the representative’s own funds.

Example:

A legal representative failed to submit a corporate tax return by the deadline, resulting in monthly penalties accruing from the day after the due date.

 

4.2 Failure to Register for Corporate Tax

Businesses must register within the timeframe specified by the FTA.

Administrative Penalty:
  • AED 10,000
Example:

A company became liable for Corporate Tax but failed to submit its registration application on time, triggering a fixed penalty.

 

4.3 Failure to Pay Corporate Tax Due

Unpaid corporate tax attracts a significant ongoing penalty.

Administrative Penalty:
  • 14% per annum, calculated monthly, on unpaid tax amounts
Example:

A company filed its return showing tax payable but failed to settle the amount within the allowed timeframe, resulting in monthly penalty charges.

 

Special Rules for Monthly Penalty Imposition

Where penalties are imposed monthly:

  • If the month does not have the corresponding date, the penalty is imposed on the first day of the following month
  • For all other months, penalties follow the date of first imposition

Conclusion

The UAE tax penalty framework reflects a zero‑tolerance approach to procedural non‑compliance. Filing correct returns alone is no longer sufficient. Businesses must maintain proper records, issue accurate tax documents, comply with pricing rules, and meet all registration and notification requirements.

A proactive compliance strategy, supported by regular reviews and professional tax advisory, remains the most effective way to mitigate penalties and avoid regulatory exposure.