New UAE tax law changes come into effect, fines slashed

New provisions on administrative penalties imposed for violations of tax laws in the UAE have come into effect.

The Federal Tax Authority (FTA) announced that Cabinet Decision No. 129 of 2025 amending certain provisions of Cabinet Decision No. 40 of 2017 had entered into force on April 14. The decision aims to support taxable persons, ease the burden on them, and assist them in meeting their obligations and regularising their positions where any tax errors or violations exist.

The authority noted that the amendments provide further facilitations for persons registered for value added tax and excise tax purposes, encourage voluntary compliance, and promote the prompt updating of tax records and correction of data held by the authority, where required, as well as the rectification of tax positions.

Abdulaziz Mohammed Al Mulla, director general of the FTA, said: “The new amendment, which includes reductions in a number of administrative penalties imposed for violations of tax laws, comes within the framework of the wise leadership’s directives to implement the tax system in accordance with international best practices, in order to preserve the strong and sustained growth of the national economy and enhance transparency through establishing an ideal tax legislative environment characterised by flexibility and responsiveness to change, supported by continuous review and the sustainable development of tax legislation in line with evolving requirements.”

“We call on tax registrants, where violations of tax legislation exist, to benefit from the significant advantages provided by the decision, which introduces further facilitations aimed at reducing the tax burden on business sectors, thereby enabling them to strengthen their pivotal role in reinforcing the UAE’s leading position as a global financial and economic centre,” he added.

The FTA indicated that, following the new decision, many types of administrative penalties have either been reduced or had their calculation mechanisms amended. The reductions cover numerous administrative violations related to the application of the Federal Decree-Law on Tax Procedures, the Federal Decree-Law on Excise Tax, and the Federal Decree-Law on Value Added Tax.

The authority explained that, under the amendments, the administrative penalty for the failure to submit data, records and tax-related documents in Arabic to the authority when requested has been reduced from Dh20,000 to Dh5,000. The penalty for a registrant’s failure to notify the authority of any case that may require amendment of the information pertaining to its tax record has been reduced from Dh5,000 for the first instance and Dh10,000 in the case of repetition, to the imposition of one of two penalties: Dh1,000 for each violation, and Dh5,000 in the event of repetition of the same violation within 24 months from the date of the last violation. In addition, the penalty for a legal representative of a taxable person failing to notify the authority of his appointment within the prescribed time limits has been reduced from Dh10,000 previously to Dh1,000, provided that the penalties shall be payable from the legal representative’s own funds.

The FTA also noted that the amendments extend to administrative penalties relating to the following violations: failure by a taxable person to pay the payable tax within the time limits specified in the tax law; submission by a registrant of an incorrect tax return; submission by a taxable person or payer of tax of a voluntary disclosure in relation to errors in a tax return, tax assessment, or tax refund application; failure by a taxable person or payer of tax to submit a voluntary disclosure in respect of an error in a tax return, tax assessment, or tax refund application before being notified by the authority of a tax audit; failure by a registrant to account for tax on behalf of another person where the registrant is required to do so under the tax law.