UAE Ministry of Finance updates the Tax Procedures and Administrative Penalties for tax non-compliance as per April 2026
20 April 2026 – The Ministry of Finance (MOF) of the United Arab Emirates (UAE) recently published important changes to the regimes for Tax Procedures and Administrative Penalties for violation of the Tax Laws in place, which are effective as per April 2026.
In this alert, we set out the key amendments to new regulations and how these impacts businesses in its daily operations and the current risks involved of tax non-compliance.
Relevancy for businesses
As with any significant legal update, businesses should ensure they review existing policies and procedures against the amendments in the Tax Procedures Executive Regulation, particularly in relation to record retention and procedures to follow in the event of an error.
The new administrative penalty regime introduces some alleviation of penalties in the event of a tax audit, and presents a more simplified approach of penalizing voluntary disclosures (VDs) based on the time since the error arose. However, in some cases, penalties applying in the case of a VD may actually increase compared to the previous penalty regime, thereby increasing the importance of regular internal review cycles and error correction policies.
Given the impending introduction of e-invoicing in the UAE – which will report transactional level detail to the FTA on a near real-time basis – it becomes increasingly important for businesses to consider internal reviews of adopted tax positions as soon as possible and make any required updates. This will allow the correction of potential errors prior to the adoption of e-invoicing, with the aim of reducing the volume of VDs or audit assessments from the FTA following its roll out.
Key takeaways changes
Updated Executive Regulation on Tax Procedures – effective from 1 April 2026
The MOF has updated the Executive Regulation of Federal Decree-Law No. 28 of 2022 on Tax Procedures (“Tax Procedures ER”) by means of Cabinet Decision No. 17 of 2026, which is effective from 1 April 2026 (link). These regulations explain how the tax procedure rules should be applied in practice by Taxpayers and the Federal Tax Authority (“FTA”) regarding all taxes (i.e., including VAT and CIT) and administrative penalties. Next to clarifications and editorial updates, key changes by the amendments to the Tax Procedures ER for businesses involve the following areas:
- VD in case of no difference in due tax after becoming aware of an error or emission:
Previously, the Tax Procedures ER included that if a Taxpayer became aware of an error or omission in a tax return without any difference in due tax, the taxpayer could correct the error or submit a VD as specified by the FTA. This often required a VD to be submitted in cases where the due tax to the FTA on the return remained the same after correction. This provision has now been removed by the amendments, which therefore indicates that the taxpayer is not required to file VDs in such instances. This is a welcome change, removing additional administrative requirements in cases where no tax difference arises. - Record-keeping extension for pending refund applications: Taxable persons must now retain books and records for an additional two years (on top of the standard five years) where a tax refund application remains undecided, if the application was filed timely.
- Extended period to seize documents or assets under an audit: A tax auditor may seize documents and assets in exercising his function and shall provide a record of what was seized. This record should include the period during which it is expected to be seized by the FTA. The amendments now allow the FTA to extend the period specified to seize the documents or assets, provided that the concerned person is notified, where possible.
Updated Administrative Penalties for Violation of Tax Laws in the UAE – effective from 14 April 2026
The Administrative Penalties for Violation of Tax Laws in the UAE has also been updated by the MOF by means of Cabinet Decision No. 129 of 2025 (link). This regulation sets out the administrative penalty regime for UAE tax non-compliance. Below we outline the key changes by the amendments, which are effective as per 14 April 2026.
In many cases the applicable penalties have been reduced, or simplified for ease of application. Additionally, in certain cases the changes align the administrative penalties with those published specifically related to the application of Corporate Income Tax (Cabinet Decision No. 10 of 2024), thereby streamlining the administrative penalty regime in the UAE. In particular, there has been a reduction in penalties due in the event of an assessment raised by the FTA following a tax audit, which will be a welcome change for taxpayers.
Violations and Administrative Penalties related to the Implementation of Tax Procedures Law
Description of Violation |
Old administrative Penalty in AED |
New and applicable administrative penalty in AED as per 14 April 2026 |
Failure of the person |
10,000 for the first time.
20,000 in case of repetition. |
One of the following two penalties shall be imposed: 1. 10,000 for each violation. 2. 20,000 in each case of repeated violation within 24 months from the date of |
Failure of the person |
20,000 |
5,000 |
| Failure of the registrant to inform the FTA of any case that may require the amendment of the information pertaining to his tax record kept by the FTA |
5,000 for the first time.
10,000 in case of repetition. |
One of the following two penalties shall be imposed: 1. 1,000 for each violation. 2. 5,000 in each case of repeated violation within 24 months from the date of the last violation. |
Failure of the taxable person to settle the payable tax timely |
1. The taxable person shall be obliged to pay the penalty applicable to late payment of payable tax up to a maximum of 200%, pursuant to the following: a. 2% of the unpaid tax shall b. 4% monthly penalty is |
1. A monthly penalty of (14%) per annum, for each month or part thereof, imposed on the unsettled payable tax amount from the day following the due date of payment and on the same date monthly thereafter.
(…) |
The registrant submits an incorrect |
1. Fixed penalty shall be applied: 1,000 for the first (….) |
500, unless the registrant takes one of the following actions: 1. Corrects his tax return within the deadline specified for submitting the tax return. 2. Submits a VD to correct the tax return without resulting in a difference in the amount of due tax. |
The submission of a voluntary disclosure |
A percentage-based penalty shall be applied on the difference (…), pursuant to 1. 5% on the difference, 2. 10% on the difference, 3. 20% on the difference, where the VD is submitted within the third year (…) 4. 30% on the difference, where the VD is submitted within the fourth year (…) |
A monthly penalty of 1% on the tax difference, for each month or part thereof, to be applied as of the date following the due date of the tax return, or submission of the relevant tax refund application until the date of the VD is submitted. |
Failure of the taxable person |
1. A penalty of 50% on the amount of error. 2. A penalty of 4% for every month or part of the month, of the following: a. The unpaid tax (…) b. The tax that was not returned to the FTA due to ineligible refund (…). |
The two following penalties shall be imposed: 1. A fixed penalty of 15% on the tax difference. 2. A monthly penalty of 1% on the tax difference, for each month or part thereof (…) |
How Deloitte can help
Deloitte is able to discuss these changes with you and assess to which extent these impacts your business in your daily business operations or any ongoing discussions or matters with the FTA. Deloitte can also help to support to ensure your business to avoid any non-compliance and help to review your current tax position by means of, for example, a health check review, including any corrections to mitigate penalties if necessary. Furthermore, our team has extensive experience in providing support during tax audits.
