- The UAE introduced a major tax penalty overhaul effective April 14, 2026, under Cabinet Decision No. 129 of 2025 to encourage voluntary compliance.
- VAT late-payment penalties are now a flat 14% per year, calculated monthly, replacing the old 2% + 4% compounding structure.
- Voluntary disclosures are rewarded with lower penalties (1% per month), while errors found in audits face a 15% penalty plus the monthly charge.
- Penalties for incorrect returns and record-keeping breaches were reduced or clarified, with lower fines for first and repeat violations and some waiver options if corrected in time.
- Administrative penalties for failing to update tax record information or provide Arabic records were also reduced.
Source: nrdoshi.ae
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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