- UAE Cabinet Decision No. 129 of 2025 introduces a compliance-focused tax penalty system effective April 2026, replacing punitive measures.
- Late payment penalties shift from 2% initial + 4% monthly (max 300%) to a non-compounding 14% annual rate.
- Fixed penalties for FTA-discovered errors reduced from 50% to 15%, with monthly penalties lowered from 4% to 1%.
- Voluntary disclosure penalties change from yearly brackets (5–40%) to 1% per month on the tax difference.
- Most administrative penalties are significantly reduced, encouraging rapid correction and requiring businesses to review tax strategies.
Source: fiscal-requirements.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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