Administrative Penalties
The UAE tax legislations have established a comprehensive framework of administrative penalties for violations of tax regulations. These penalties, outlined in Cabinet Decision No. 49 of 2021, cover tax procedures, excise tax, and value-added tax (VAT), and Cabinet Decision No. 75 of 2023 & No. 10 of 2024m cover corporate tax.
The following tables provide a detailed overview of the specific violations and the corresponding penalties, helping businesses understand their obligations and the consequences of non-compliance.
Table of Contents
- Tax Procedures’ Violations and Administrative Penalties
- Value Added Tax’s Violations and Administrative Penalties
- Corporate Tax’s Violations and Administrative Penalties
- Excise Tax’s Violations and Administrative Penalties
Tax Procedures’ Violations and Administrative Penalties
Related to the Implementation of Federal Law No. 7 of 2017
| No | Violation | Penalty in AED |
|---|---|---|
|
1 | The failure of the Person conducting Business to keep the required records and other information specified in the Tax Procedures Law and the Tax Law. |
10,000 for the first time. 20,000 in case of repetition. |
|
2 |
The failure of the Person conducting Business to submit the data, records, and documents related to Tax in Arabic to the Authority when requested. |
20,000 |
|
3 |
The failure of the Taxable Person to submit a registration application within the timeframe specified in the Tax Law. |
10,000 |
|
4 |
The failure of the Registrant to submit a deregistration application within the timeframe specified in the Tax Law. |
1,000 in case of delay, and on the same date monthly thereafter, up to a maximum of 10,000. |
|
5 |
The failure of the Registrant to inform the Authority of any circumstance that requires the amendment of the information pertaining to its Tax record kept by Authority. |
5,000 for the first time. 10,000 in case of repetition. |
| 6 | The failure of the Legal Representative of the Taxable Person to inform the Authority of its appointment as Legal Representative within the specified timeframe, in which case the Penalties will be due from the Legal Representative’s own funds. | 10,000 |
| 7 | The failure of the Legal Representative for the Taxable Person to file a Tax Return within the specified timeframe, in which case the Penalties will be due from the Legal Representative’s own funds. | 1,000 for the first time. 2,000 in case of repetition within 24 months. |
| 8 | The failure of the Registrant to submit the Tax Return within the timeframe specified in the Tax Law. | 1,000 for the first time. 2,000 in case of repetition within 24 months. |
| 9 | The failure of the Taxable Person to settle the Payable Tax stated in the submitted Tax Return or Voluntary Disclosure, or the Tax Assessment he was notified of, within the timeframe specified in the Tax Law. | 1. The penalty is up to a maximum of 300%, on the unsettled Tax amount, as follows: a. 2% of the unpaid Tax due on the day following the due date b. 4% monthly penalty is due after one month from the due date of payment, and on the same date monthly thereafter, on the unsettled Tax amount to date. 2. For Voluntary Disclosure and Tax Assessment, the due date shall be as follows: a. 20 business days from the date of submission, in the case of a Voluntary Disclosure. b. 20 business days from the date of receipt, in the case of a Tax Assessment. |
| 10 | The submittal of an incorrect Tax Return by the Registrant. | 1. Fixed penalty shall be applied: 1,000 for the first time. 2,000 in case of repetition. 2. As an exception to Clause 1 of this penalty, if the incorrect Tax Return results in a Tax difference less than the fixed penalty listed in Clause 1 of this penalty, a penalty equal to the that Tax difference of at least 500 shall be imposed. 3. Anyone correcting their Tax Return prior to the due date of payment shall be excluded from the penalty imposed under Clauses 1 and 2 of this penalty. |
| 11 | The submittal of a Voluntary Disclosure by the Person/Taxpayer on errors in the Tax Return, Tax Assessment or refund application pursuant to Article 10(1) and 10(2) of the Tax Procedures Law. | Without prejudice to the potential consequences of the penalty mentioned in Clause 10 of this Table, a percentage-based penalty shall be applied on the difference between the Tax that was calculated and that which should have been calculated, pursuant to the following: 1. 5% on the difference, where the Voluntary Disclosure is submitted within one year from the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application; 2. 10% on the difference, where the Voluntary Disclosure is submitted within the second year following the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application; 3. 20% on the difference, where the Voluntary Disclosure is submitted within the third year following the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application; 4. 30% on the difference, where the Voluntary Disclosure is submitted within the fourth year from the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application; 5. 40% on the difference, where the Voluntary Disclosure is submitted after the fourth year from the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application. |
| 12 | The failure of the Person/Taxpayer to voluntarily disclose an error in the Tax Return, Tax Assessment, or refund application pursuant to Article 10 (1) and 10(2) of the Tax Procedures Law before being notified by the Authority that it will be subject to a Tax Audit. | Without prejudice to the potential consequences of the penalty mentioned in Clause 10 of this Table, the person will be subject to: 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 to the Authority, from the date the payment is due for the relevant Tax Period until the date of receipt of the Tax Assessment. b. The Tax that was not returned to the Authority due to ineligible refund, from the date of Tax refund until the date of receipt of the Tax Assessment. |
| 13 | The failure of the Person conducting Business to facilitate the work of the Tax Auditor in violation of the provisions of Article 21 of the Tax Procedures Law. | 20,000 |
| 14 | The failure of the Registrant to calculate Tax on behalf of another Person where the Registrant Taxable Person is obliged to do so under the Tax Law. | 1. The Registrant shall be obliged to pay the penalty applicable to late settlement of Payable Tax up to a maximum of 300%, pursuant to the following: a. 2% of the unpaid Tax is due on the day following the due date of payment, where the settlement of Payable Tax is late. b. 4% monthly penalty is due after one month from the due date of payment, and on the same date monthly thereafter, on the unsettled Tax amount to date. 2. For the purposes of this penalty, the due date of payment in the case of Voluntary Disclosure and Tax Assessment, shall be as follows: a. 20 business days from the date of submission, in the case of a Voluntary Disclosure. b. 20 business days from the date of receipt, in case of a Tax Assessment. |
| 15 | A Person not accounting for any Tax that may be due on the import of goods as per the Tax Law. | 50% of unpaid or undeclared Tax. |
Value Added Tax’s Violations and Administrative Penalties
Related to the Implementation of Federal Decree-Law No. 8 of 2017
| NO | Violation | Penalty in AED |
|---|---|---|
| 1 | The failure of the Taxable Person to display prices inclusive of Tax. | 5000 |
| 2 | The failure of the Taxable Person to notify the Authority of applying Tax based on Margin. | 2500 |
| 3 | The penalty shall be the higher of 50,000 or 50% of the Tax, if applicable, chargeable on the goods in relation to the violation. | The failure to comply with the required conditions and procedures related to keeping the Goods in a Designated Zone or moving them to another Designated Zone. |
| 4 | The failure of the Taxable Person to issue a Tax Invoice or the alternative document when making any supply. | 2,500 for each detected case. |
| 5 | The failure of the Taxable Person to issue a Tax Credit Note or the alternative document. | 2,500 for each detected case. |
| 6 | The failure of the Taxable Person to comply with the conditions and procedures regarding the issuance of a Tax Invoice and a Tax Credit Note electronically. | 2,500 for each detected case. |
Corporate Tax’s Violations and Administrative Penalties
Related to the Application of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
| No | Violation | Penalty in AED |
|---|---|---|
| 1 | Failure of the Person conducting a Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to keep the required records and other information specified in the Tax Procedures Law and the Corporate Tax Law. | 10,000 for each violation. 2. 20,000 in each case of repeated violation within 24 months from the date of the last violation. |
| 2 | Failure of the Person conducting Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to submit the data, records and documents related to Tax in Arabic to the Authority when requested. | 5,000 |
| 3 | Failure of the Registrant to submit a deregistration application within the timeframe specified in the Corporate Tax Law and its implementing decisions. | 1,000 in case of late submission of the application and on the same date monthly, up to a maximum of 10,000. |
| 4 | Failure of the Registrant to inform the Authority of any case that may require the amendment of the information pertaining to his Tax record kept by the Authority. | 1,000 for each violation. 2. 5,000 in each case of repeated violation within 24 months from the date of the last violation. |
| 5 | Failure of the Legal Representative to provide notification of their appointment within the specified timeframes, in which case the penalties will be due from the Legal Representative’s own funds. | 1,000 |
| 6 | Failure of the Legal Representative to file a Tax Return within the specified timeframes, in which case the penalties will be due from the Legal Representative’s own funds. | 500 for each month, or part thereof, for the first twelve months. 2. 1,000 for each month, or part thereof, from the thirteenth month onwards. |
| 7 | Failure of the Registrant to submit a Tax Return within the timeframe specified in the Corporate Tax Law. | 500 for each month, or part thereof, for the first twelve months. 2. 1,000 for each month, or part thereof, from the thirteenth month onwards.c |
| 8 | Failure of the Taxable Person to settle the Payable Tax. | A monthly penalty of 14% per annum, for each month or part thereof, on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter. 2. For the purposes of this penalty, the due date of payment in the case of the Voluntary Disclosure and Tax Assessment, shall be as follows: a. 20 Business Days from the date of submission, in the case of a Voluntary Disclosure. b. 20 Business Days from the date of receipt, in the case of a Tax Assessment. |
| 9 | The Registrant submits an incorrect Tax Return. | 500, unless the Person corrects his Tax Return before the expiry of the deadline for the submission of the Tax Return according to the Corporate Tax Law. |
| 10 | The submission of a Voluntary Disclosure by the Taxable Person in relation to errors in the Tax Return, Tax Assessment or Tax refund application pursuant to Clauses 1 and 2 of Article 10 of the Tax Procedures Law. | 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 relevant Tax Return, the submission of the Tax refund application, or the Notification of the Tax Assessment and until the date the Voluntary Disclosure is submitted. |
| 11 | Failure of the Taxable Person to submit a Voluntary Disclosure in relation to errors in the Tax Return, Tax Assessment or Tax refund application pursuant to Clauses 1 and 2 of Article 10 of the Tax Procedures Law, before being notified by the Authority that it will be subject to a Tax Audit. | 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, to be applied as follows: a. Where the Taxable Person submits a Voluntary Disclosure after being notified that it will be subject to a Tax Audit by the Authority, the penalty shall be imposed for the period from the day following the due date of the relevant Tax Return, or the submission of the Tax refund application or Notification of the Tax Assessment and until the date the Voluntary Disclosure is submitted. b. Where the Taxable Person fails to submit a Voluntary Disclosure, the penalty shall be imposed as of the date following the due date of the relevant Tax Return, or the submission of the Tax refund application or Notification of the Tax Assessment and until the date of issuance of the Tax Assessment. |
| 12 | Failure of a Person subject to Tax Audit, his Tax Agent or Legal Representative to offer facilitation to the Tax Auditor in violation of the provisions of Article 20 of the Tax Procedures Law, in which case the penalties will be due from the Person’s, Legal Representative’s or Tax Agent’s own funds, as applicable. | 20,000 |
| 13 | Failure of a Person to submit, or late submission of a Declaration to the Authority, as required in accordance with the provisions of the Corporate Tax Law. | 500 for each month, or part thereof, for the first twelve months. 2. 1,000 for each month, or part thereof, from the thirteenth month onwards. |
| 14 | Failure of the Taxable Person to submit a Tax Registration application within the timeframe specified by the Authority in accordance with the Corporate Tax Law. | 10,000 |
Excise Tax’s Violations and Administrative Penalties
Related to the Implementation of Federal Decree-Law No. 7 of 2017
| No | Violation | Penalty in AED |
|---|---|---|
| 1 | The failure of the Taxable Person to display prices inclusive of Tax. | 5000 |
| 2 | The penalty shall be the higher of 50,000 or 50% of the Tax, if applicable, chargeable on the goods in relation to the violation. | The failure to comply with the conditions and procedures of transferring Excise Goods from a Designated Zone to another Designated Zone, and the mechanism of preserving, storing, and processing such Excise Goods. |
| 3 | The failure of the Taxable Person to provide the Authority with the price lists of the Excise Good that it produces, imports or sells. | 5,000 for the first time. 10,000 in case of repetition. |
Disclaimer
This information summary is provided for general awareness purposes only and is not intended to replace an accounting, tax, or professional advice. Please seek professional advice before making any decision. We assume no liability or responsibility for any errors, omissions, or inaccuracy in this content.
