This guide explains every revised penalty under the Tax Procedures Law, Excise Tax Law, and VAT Law, with exact fine amounts so your business knows exactly where it stands once the new rules apply.
Penalties Under the Tax Procedures Law
| No. | Violation | Penalty (AED) | Notes |
|---|---|---|---|
| 1 | Failure to keep required records and information as specified under tax laws | 1,000 per violation, or 20,000 if repeated within 24 months | Applies to physical and electronic records |
| 2 | Failure to provide data, records, or documents in Arabic when requested by the FTA | 5,000 | — |
| 3 | Failure to submit a tax registration application within the legal timeframe | 10,000 | — |
| 4 | Failure to submit a tax deregistration application on time | 1,000 per month of delay, up to a maximum of 10,000 | Repeats monthly until deregistration is completed |
| 5 | Failure to inform the FTA of changes to the taxpayer’s record | 1,000 for first violation, or 5,000 if repeated within 24 months | Includes changes in trade license, address, or ownership |
| 6 | Failure of a legal representative to notify the FTA of their appointment | 1,000 | Paid from the representative’s own funds |
| 7 | Failure of a legal representative to file a tax return on time | 1,000 for first violation, or 2,000 if repeated within 24 months | Liability stays with the representative personally |
| 8 | Failure of the registrant to submit a tax return within the deadline | 1,000 for first violation, or 2,000 if repeated within 24 months | — |
| 9 | Failure to pay the tax due within the legal timeframe | 14% per annum, calculated monthly | Applied from the day after the due date until full payment |
| 10 | Submitting an incorrect tax return | 500 | Waived if corrected before the deadline or through voluntary disclosure with no tax difference |
| 11 | Submitting a voluntary disclosure with delay | 1% of the tax difference per month | Applied from the day after the due date until disclosure is submitted |
| 12 | Failure to submit a voluntary disclosure before receiving an FTA audit notice | Fixed 15% of the tax difference, plus 1% monthly | Encourages correcting errors before the FTA finds them first |
| 13 | Failure to cooperate during a tax audit | 20,000 | Applies to the person, legal representative, or tax agent |
| 14 | Failure to calculate tax on behalf of another person when legally required | 14% per annum on the unsettled amount | Same calculation method as the unpaid tax penalty |
| 15 | Failure to calculate tax due on imported goods | 50% of the unpaid or undeclared tax | — |
Penalties Under the Excise Tax Law
| No. | Violation | Penalty (AED) | Notes |
|---|---|---|---|
| 1 | Failure to display prices inclusive of tax | 5,000 | Applies to all taxable excise goods sold in the UAE |
| 2 | Failure to follow conditions for transferring, storing, or processing excise goods in Designated Zones | The higher of 50,000 or 50% of the tax chargeable on the goods | The higher value applies |
| 3 | Failure to provide the FTA with price lists of excise goods produced, imported, or sold | 5,000 for first violation, or 10,000 if repeated | — |
Penalties Under the VAT Law
| No. | Violation | Penalty (AED) | Notes |
|---|---|---|---|
| 1 | Failure to display prices inclusive of tax | 5,000 | Applies to all goods and services offered to consumers |
| 2 | Failure to notify the FTA when applying tax under the margin scheme | 2,500 | — |
| 3 | Failure to follow conditions for keeping or transferring goods within a Designated Zone | The higher of 50,000 or 50% of the tax chargeable on the goods | The higher value applies |
| 4 | Failure to issue a tax invoice or alternative document within the required period | 2,500 per detected case | Applies to all taxable supplies |
| 5 | Failure to issue a tax credit note or alternative document within the required period | 2,500 per detected case | — |
| 6 | Failure to follow conditions for issuing tax invoices and credit notes electronically | 2,500 per detected case | Relates to e-invoicing compliance |
How Businesses Can Avoid Tax Penalties in the UAE
Register and file on time. Register for tax as soon as your business meets the eligibility threshold, and file returns with timely payments to stay compliant.
Keep proper records and invoices. Maintain all required tax documents in both digital and physical form, and be ready to provide them in Arabic if the FTA requests it.
Use a compliant e-invoicing system. A reliable e-invoicing setup helps issue correct invoices and keeps your reporting aligned with FTA requirements from the start.
Review and correct errors early. If you spot a mistake in a filing or refund claim, submit a voluntary disclosure immediately rather than waiting. The cost difference between disclosing early and waiting for an audit notice is significant under the new rules.
Follow Excise and Designated Zone rules carefully. If your business handles excise goods or operates within a Designated Zone, follow FTA rules on pricing, storage, and movement of goods closely, since these violations carry some of the highest fixed penalties in the entire framework.
Final Thoughts
Penalties for tax violations in the UAE range from AED 500 for minor filing errors to AED 50,000 or 50% of the tax value for serious offences such as Designated Zone violations. The clearest path to avoiding these costs is accurate record-keeping, timely filing, and acting on errors the moment they are discovered rather than waiting for the FTA to find them first.
Need help reviewing your tax position? Talk to Dos Hermanos Accounting and Tax Consultants today.
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- Corporate Tax Law for UAE Free Zones Explained: Explore the tax benefits, eligibility criteria, and compliance requirements for free zone businesses.
- Small Business Relief Under UAE Corporate Tax: Discover how small businesses can reduce their tax burden through available relief measures.
- Dubai Property Tax: Key Facts and Regulations: Understand the taxes, fees, and legal considerations related to property ownership in Dubai.
- Non-Resident Business Tax Compliance in the UAE: Get insights into the tax obligations and compliance requirements for non-resident businesses.
