All 15 Administrative Penalties in Table 1 of Cabinet Decision No. 40 of 2017 — Tax Procedures Law Violations Explained

Table 1 of Cabinet Decision No. 40 of 2017 — as amended by Cabinet Decision No. 129 of 2025 (effective 14 April 2026) — contains 15 categories of administrative penalties for violations of the Tax Procedures Law. This post sets out every penalty in full, with the exact amounts, conditions, and timing rules that determine when each penalty applies.

Penalty 1 — Failure to Keep Required Records

Violation: The person conducting Business, or any person who has an obligation under the Tax Procedures Law or the Tax Law, fails to keep the required records and other information specified in those laws.

Penalty:

• AED 10,000 for each violation.
• AED 20,000 for each repeated violation within 24 months from the date of the last violation.

Note: Each distinct record-keeping failure is a separate violation — a business with multiple deficient record categories may face multiple AED 10,000 penalties simultaneously.

Penalty 2 — Failure to Submit Records in Arabic When Requested

Violation: The person conducting Business, or any person obligated under the Tax Procedures Law or the Tax Law, fails to submit data, records, and documents related to tax in the Arabic language to the FTA when the FTA requests them.

Penalty: AED 5,000 (fixed, no tiered repetition structure).

Note: This penalty applies even if the records exist and are accurate — the failure is purely linguistic. Businesses maintaining records exclusively in English or another language must be able to produce Arabic translations on demand.

Penalty 3 — Failure to Submit Registration Application on Time

Violation: The Taxable Person fails to submit a registration application within the timeframe specified in the Tax Law (whether for VAT or Excise Tax).

Penalty: AED 10,000 (single fixed penalty, not recurring).

Note: This is a fixed penalty. It does not compound monthly. However, if registration is delayed and the person continues to make taxable supplies without registering, the failure to charge and account for VAT creates separate exposure under the late payment and voluntary disclosure penalty streams.

Penalty 4 — Failure to Submit Deregistration Application on Time

Violation: The Registrant fails to submit a deregistration application within the timeframe specified in the Tax Law after the conditions for deregistration are met.

Penalty: AED 1,000 upon late submission, imposed on the same date monthly thereafter, up to a maximum of AED 10,000.

Note: Per Cabinet Decision No. 49 of 2021, if the monthly penalty date does not exist in a given month (e.g., a penalty starting on 31 January), the penalty for that month falls on the first day of the following month.

Penalty 5 — Failure to Notify FTA of Tax Record Changes

Violation: The Registrant fails to inform the FTA of any case that may require the amendment of the information pertaining to their tax record kept by the FTA.

Penalty:

• AED 1,000 for each violation.
• AED 5,000 for each repeated violation within 24 months from the last violation.

Note: Triggering events include changes to business name, address, legal form, business activities, or any other material information held in the FTA's tax record for the registrant.

Penalty 6 — Legal Representative Fails to Notify FTA of Appointment

Violation: The Legal Representative of the Taxable Person fails to provide notification of their appointment to the FTA within the specified timeframes.

Penalty: AED 1,000 — payable from the Legal Representative's own personal funds, not from the funds of the taxable person.

Note: The personal-funds rule is significant: it creates direct financial exposure for managers, guardians, and court-appointed trustees who take on legal representative roles without completing FTA notification requirements.

Penalty 7 — Legal Representative Fails to File Tax Return on Time

Violation: The Legal Representative for the Taxable Person fails to file a Tax Return within the specified timeframes.

Penalty:

• AED 1,000 for the first time — payable from the Legal Representative's own funds.
• AED 2,000 for repetition within 24 months — payable from the Legal Representative's own funds.

Note: This penalty runs in parallel to, not instead of, the penalty on the Registrant under Penalty 8. Both the registrant and the legal representative may be exposed simultaneously.

Penalty 8 — Registrant Fails to Submit Tax Return on Time

Violation: The Registrant fails to submit the Tax Return within the timeframe specified in the Tax Law.

Penalty:

• AED 1,000 for the first time.
• AED 2,000 for repetition within 24 months.

Note: "Repetition" means a second late filing within 24 months of the first — not 24 months from the original due date of the late return. A business that files late twice in two years faces the doubled penalty on the second occasion.

Penalty 9 — Failure to Settle Payable Tax on Time

Violation: The Taxable Person fails to settle the Payable Tax within the timeframe specified in the Tax Law.

Penalty: 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, continuing on the same date monthly thereafter.

Special due-date rules (as clarified in the 2025 amendment):

• For a Voluntary Disclosure: the due date of payment is 20 business days from the date of submission.
• For a Tax Assessment: the due date of payment is 20 business days from the date of receipt.

Note: This is the highest-cost penalty in the UAE tax system on a time-weighted basis. On AED 1,000,000 of unpaid tax, the penalty accumulates at approximately AED 11,667 per month. There is no cap.

Penalty 10 — Registrant Submits Incorrect Tax Return

Violation: The Registrant submits a Tax Return that contains incorrect information.

Penalty: AED 500 — unless the Registrant either:

• Corrects the Tax Return within the deadline specified for submitting the Tax Return under the Tax Law; or
• Submits a Voluntary Disclosure to correct the Tax Return where this does not result in a difference in the amount of Due Tax.

Note: If the error creates a Tax Difference, the AED 500 penalty is superseded by the far more significant penalties under items 11 and 12 — making the AED 500 effectively the lowest-risk outcome in the error-correction hierarchy.

Penalty 11 — Voluntary Disclosure for Tax Return/Assessment Errors

Violation: The Taxable Person or Taxpayer submits a Voluntary Disclosure for errors in a Tax Return, Tax Assessment, or tax refund application pursuant to Clauses 1 and 2 of Article 10 of the Tax Procedures Law.

Penalty: A monthly penalty of 1% on the Tax Difference, for each month or part thereof, from the day following the due date of the Tax Return or submission of the relevant tax refund application, until the date the Voluntary Disclosure is submitted.

Note: This is the "good faith" penalty — the minimum consequences for self-reporting an error. It applies only when the VD is submitted before the taxpayer is notified of a forthcoming Tax Audit. There is no fixed percentage component under this item.

Penalty 12 — Failure to Submit Voluntary Disclosure Before Audit Notification

Violation: The Taxable Person or Taxpayer fails to submit a Voluntary Disclosure for errors in a Tax Return, Tax Assessment, or tax refund application before being notified by the FTA that it will be subject to a Tax Audit.

Penalty (both imposed simultaneously):

• A fixed penalty of 15% on the Tax Difference.
• A monthly penalty of 1% on the Tax Difference per month or part thereof, calculated as follows:
  • If a VD is submitted after audit notification: from the day after the Tax Return due date until the VD submission date.
  • If no VD is submitted: from the day after the Tax Return due date until the date of issuance of the Tax Assessment.

Note: The 15% fixed penalty is the single most consequential avoidable cost in the UAE tax penalty system. On a AED 1,000,000 Tax Difference, it equals AED 150,000 — added purely because the taxpayer did not self-report before the audit notification.

Penalty 13 — Obstruction of Tax Audit

Violation: The person subject to a Tax Audit, their Tax Agent, or Legal Representative fails to offer facilitation to the Tax Auditor in violation of Article 20 of the Tax Procedures Law.

Penalty: AED 20,000 — payable from the person's own funds, or from the Legal Representative's or Tax Agent's own funds, as applicable.

Note: "Facilitation" under Article 20 includes providing access to commercial records, information, data, and goods, and cooperating with the auditor's process. Obstruction — whether active or passive — triggers this penalty.

Penalty 14 — Failure to Calculate Reverse Charge Tax

Violation: The Registrant Taxable Person fails to calculate tax on behalf of another person where the Registrant is obligated to do so under the Tax Law (i.e., reverse charge mechanism failures).

Penalty: A monthly penalty of 14% per annum, for each month or part thereof, imposed on the unsettled amount of Payable Tax, from the day following the due date of payment. Same VD/Assessment due-date rules as Penalty 9.

Note: This mirrors the structure of Penalty 9 but applies specifically to reverse-charge scenarios — common in cross-border services, imports of services, and certain real estate transactions under UAE VAT.

Penalty 15 — Failure to Calculate Tax on Imported Goods

Violation: The Person fails to calculate any tax that may be due on the import of goods as per the Tax Law.

Penalty: 50% of the unpaid or undeclared Tax.

Note: This is the highest fixed-rate penalty in the entire decision. At 50% of the undeclared tax, it creates catastrophic exposure for businesses importing goods without proper VAT accounting — particularly relevant for commercial importers and businesses using customs suspension arrangements incorrectly.

Summary Table — All 15 Penalties at a Glance

How Abdelhamid & Co. Can Help

As a licensed Tax Agent registered with the FTA (TAN: 30003958, TAAN: 20033908) and a Certified Public Accounting firm licensed by the Ministry of Economy (LC0106-01), we advise businesses on penalty exposure, prepare voluntary disclosures, and represent clients in FTA reconsideration and TDRC proceedings. We serve clients across all UAE emirates from our office in Sharjah.