FTA has announced the entry into force of Cabinet Decision No. (129) of 2025 amending administrative penalties under Cabinet Decision No. (40) of 2017, introducing reductions and revised mechanisms to support voluntary compliance, ease tax burdens, and enhance regulatory flexibility.
UAE Federal Tax Authority (FTA) has announced the entry into force of Cabinet Decision No. (129) of 2025, which amends certain provisions of Cabinet Decision No. (40) of 2017 on administrative penalties imposed for violations of tax laws in the UAE.
The Authority stated that the amendments are designed to support taxable persons, ease compliance burdens, and assist taxpayers in regularising their positions in cases of tax errors or violations. The changes are also intended to enhance the UAE’s competitiveness in ease of doing business by encouraging voluntary compliance, prompt updates of tax records, and correction of data held by the Authority where required.
According to HE Abdulaziz Mohammed Al Mulla, Director General of the Federal Tax Authority, the amendment—including reductions in a number of administrative penalties imposed for violations of tax laws—reflects directives to implement the tax system in line with international best practices, strengthen transparency, and ensure a flexible and responsive tax legislative environment supported by continuous development.
He added that the FTA urges tax registrants to take advantage of the facilitations provided under the Decision, which aim to reduce the tax burden on business sectors and reinforce the UAE’s position as a global financial and economic centre. He also emphasised that the amendments support voluntary compliance and encourage registrants to submit voluntary disclosures without exposure to significant financial penalties.
The FTA confirmed that several administrative penalties have been reduced or had their calculation mechanisms amended, covering violations under the Federal Decree-Law on Tax Procedures, the Federal Decree-Law on Excise Tax, and the Federal Decree-Law on Value Added Tax.
Among the key changes, the penalty for failure to submit data, records and tax-related documents in Arabic to the Authority when requested has been reduced from AED 20,000 to AED 5,000. The penalty for failure to notify the Authority of any case requiring amendment of tax record information has been revised from AED 5,000 for the first instance and AED 10,000 for repetition to AED 1,000 per violation, and AED 5,000 in the event of repetition within 24 months. In addition, the penalty for a legal representative of a taxable person failing to notify the Authority of appointment within the prescribed time limits has been reduced from AED 10,000 to AED 1,000, payable from the legal representative’s own funds.
The amendments also extend to penalties relating to failure to pay tax within prescribed time limits, submission of incorrect tax returns, voluntary disclosures related to errors in tax returns, tax assessments, or tax refund applications, failure to submit voluntary disclosures before a tax audit notification, and failure to account for tax on behalf of another person where required under tax law.
The Decision became effective on 14 April 2026.
