UAE excise tax administrative penalties in 2026 are governed by Cabinet Decision No. 40 of 2017 (as amended by Cabinet Decisions No. 49 of 2021, No. 108 of 2021, and No. 129 of 2025 effective 14 April 2026), covering violations of Federal Decree-Law No. 7 of 2017 on Excise Tax and the Tax Procedures Law. Penalties range from AED 500 for incorrect returns to AED 50,000 or 50% of tax for Designated Zone transfer violations. Abdelhamid & Co (FTA TAAN 20033908) provides voluntary disclosure preparation, reconsideration requests, and compliance reviews to reduce penalty exposure.
UAE Excise Tax Penalty Schedule — 2026
Penalties apply across three categories: general tax procedures violations (Table 1), excise tax-specific violations (Table 2), and VAT-specific violations (Table 3). For excise tax registrants, the following penalties from Tables 1 and 2 are most relevant:
| Violation | Penalty (AED) |
|---|---|
| Failure to keep required records | 10,000 (first); 20,000 (repeat within 24 months) |
| Failure to submit records in Arabic when requested | 5,000 |
| Late registration application | 10,000 |
| Late deregistration application | 1,000/month up to 10,000 maximum |
| Failure to notify FTA of changes to tax record | 1,000 (first); 5,000 (repeat within 24 months) |
| Late filing of tax return | 1,000 (first); 2,000 (repeat within 24 months) |
| Late payment of Payable Tax | 14% p.a. monthly on unpaid amount, from day after due date |
| Incorrect tax return | 500 (unless corrected before deadline or voluntary disclosure filed) |
| Failure to display prices inclusive of excise tax | 5,000 |
| Failure to provide FTA with excise goods price lists | 5,000 (first); 10,000 (repeat) |
| Improper DZ-to-DZ transfer of excise goods | Higher of 50,000 or 50% of applicable tax |
| Failure to facilitate tax auditor access | 20,000 |
| Failure to calculate tax on behalf of another (where required) | 14% p.a. monthly on unpaid amount |
| Failure to calculate tax due on import | 50% of unpaid or undeclared tax |
Voluntary Disclosure — Reduced Penalty Mechanism
The Tax Procedures Law provides a voluntary disclosure mechanism allowing taxable persons to self-correct errors in tax returns, tax assessments, or refund applications. Under Table 1, Row 11 of Cabinet Decision No. 40 of 2017, the penalty for a voluntary disclosure is a monthly penalty of 1% on the tax difference for each month from the due date of the original return until the date of the voluntary disclosure. This is substantially lower than the combined 15% fixed penalty plus 1% monthly for persons who fail to disclose before being notified of an audit.
The key timing rule: if a taxable person submits a voluntary disclosure after being notified of a forthcoming tax audit, the 15% fixed penalty applies in addition to the 1% monthly penalty. If a person fails to disclose at all, the same combined penalties apply until the date of the tax assessment. The most favourable outcome is always to submit a voluntary disclosure before any FTA audit notification.
Late Payment Penalty — 14% Per Annum Monthly
The late payment penalty under Table 1, Row 9 of Cabinet Decision No. 40 of 2017 is calculated at 14% per annum on the unpaid Payable Tax, applied monthly for each month or part thereof from the day after the due date. For voluntary disclosures, the due date is 20 business days from submission; for tax assessments, it is 20 business days from receipt. This effectively creates a monthly charge of approximately 1.167% on outstanding amounts.
Tax Evasion — Criminal Penalties
Beyond administrative penalties, Article 23 of the Decree-Law (amended by Federal Decree-Law No. 19 of 2022) specifies acts constituting tax evasion, penalised under the Tax Procedures Law. These include: bringing excise goods into or out of the UAE without paying due tax; producing, transferring, storing, transporting, or receiving excise goods with unpaid tax and intent to evade; placing false distinguishing marks on excise goods to evade tax; and submitting false, counterfeit, or unreal documents. Tax evasion carries criminal penalties including fines and imprisonment under the Tax Procedures Law.
Price Display Obligation
Under Article 11 of the Decree-Law and Article 13 of the Executive Regulation, the advertised price of excise goods when sold must be inclusive of excise tax. The penalty for failure to display prices inclusive of tax is AED 5,000 under Table 2 of Cabinet Decision No. 40 of 2017. Exceptions apply where there is a pre-existing purchase agreement made before the Decree-Law's effective date, or where the purchaser is an exporter, foreign government/diplomatic body, or GCC registrant entitled to a refund.
Record-Keeping Requirements
Article 24 of the Decree-Law requires taxable persons to keep: records of all produced, imported, or stockpiled excise goods; records of exported excise goods and export evidence; records of stock levels including details of lost or destroyed items; and a tax record showing due tax on imports, productions, and stockpiled goods, plus deductible tax. Failure to maintain these records attracts a penalty of AED 10,000 for the first violation and AED 20,000 for repeat violations within 24 months, under Table 1 of Cabinet Decision No. 40 of 2017.
How Abdelhamid & Co Reduces Excise Tax Penalty Exposure
Our approach combines proactive compliance reviews, voluntary disclosure preparation before audit notifications, and representation at reconsideration hearings for penalties we believe were incorrectly assessed. We also assist with voluntary disclosures and the preparation of all required excise tax records under Article 24 of the Decree-Law.
Frequently Asked Questions
What is the penalty for late excise tax registration in the UAE?
Under Table 1 of Cabinet Decision No. 40 of 2017, failure to submit an excise tax registration application within the required timeframe attracts an administrative penalty of AED 10,000. This applies to the initial registration obligation under Article 5 of Federal Decree-Law No. 7 of 2017.
What is the late payment penalty for UAE excise tax?
The late payment penalty is 14% per annum calculated monthly on the outstanding Payable Tax, applied from the day after the due date. This applies to both ordinary late payments and amounts arising from voluntary disclosures or tax assessments (with a 20 business day grace period from submission or receipt in those cases).
What happens if I submit a voluntary disclosure for excise tax errors?
Under Table 1 of Cabinet Decision No. 40 of 2017, a voluntary disclosure attracts a monthly penalty of 1% on the tax difference from the original return due date. This is substantially more favourable than the 15% fixed penalty plus 1% monthly that applies if the FTA discovers the error during an audit without a prior disclosure.
What is the penalty for incorrect transfer of excise goods between UAE Designated Zones?
Under Table 2 of Cabinet Decision No. 40 of 2017, the penalty for failure to comply with conditions and procedures for transferring excise goods between Designated Zones is the higher of AED 50,000 or 50% of the tax chargeable on the goods in relation to the violation.
Can UAE excise tax penalties be challenged or reduced?
Yes. Under Article 5 of Cabinet Decision No. 40 of 2017, any person may object to administrative penalties through the reconsideration procedures in Federal Law No. 7 of 2017 on Tax Procedures. This typically involves submitting a reconsideration request to the FTA within the prescribed timeframe, supported by documented reasons for the violation and evidence of remediation.
Related Services
- Voluntary Disclosure Service — prepare and submit voluntary disclosures before audit notification
- Reconsideration Requests — challenge incorrect penalty assessments before the FTA
- Compliance Review — identify and rectify errors before they attract penalties
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