The Federal Tax Authority has confirmed that Cabinet Decision No. 129 of 2025 — which amends Cabinet Decision No. 40 of 2017 on the administrative penalties imposed for violations of tax laws — will take effect on 14 April 2026. The amendments cut and restructure penalties across the Tax Procedures Law, the VAT Law and the Excise Tax Law, reduce fines for several first-time and minor administrative failures, and align the penalty concepts that apply to VAT, Excise and Corporate Tax. Registered businesses have a defined window before the effective date to correct records and file voluntary disclosures on more favourable terms.
Who should read this
VAT- and Excise-registered businesses, taxable persons under the Tax Procedures Law, in-house finance and tax teams, tax agents and legal representatives, and any taxpayer with pending errors, arrears or a reconsideration or waiver request before the FTA.
Directly affected
Key facts
- Instrument: Cabinet Decision No. 129 of 2025, amending Cabinet Decision No. 40 of 2017 on the administrative penalties for violations of tax laws.
- Issued: 9 October 2025; published on the Federal Tax Authority portal in November 2025.
- Effective date: 14 April 2026.
- Scope: penalties under the Tax Procedures Law, the VAT Law and the Excise Tax Law; definitions and timelines harmonised so the same concepts apply across VAT, Excise and Corporate Tax.
- Direction of change: several fixed penalties reduced, with lower charges for first-time and minor administrative failures.
- Voluntary disclosure and late payment: the schedule for voluntary-disclosure and late-payment charges is restructured to reward early, correct disclosure; the enacted Arabic text governs the precise percentages and amounts.
- Jurisdiction: federal — applies across all Emirates; it does not amend the separate regimes of the DIFC or ADGM financial free zones.
Executive summary
Cabinet Decision No. 129 of 2025 is the most substantial revision of the UAE's administrative tax-penalty schedule since Cabinet Decision No. 40 of 2017 was first issued. Rather than replacing the 2017 framework, it amends it — recalibrating penalty amounts, softening the treatment of first-time and low-materiality failures, and standardising the definitions and time limits that run through the Tax Procedures Law, the VAT Law and the Excise Tax Law. The stated purpose is to ease the compliance burden, encourage voluntary correction of records, and give registered businesses a predictable, tiered penalty structure. Because the decision was published well ahead of its 14 April 2026 effective date, taxpayers have a transition window to put their filing and payment position in order before the amended schedule applies.
What changed
The amendments touch the categories of violation that generate the highest volume of FTA penalties in practice:
- Reduced fixed penalties. A number of set fines are lowered, with materially smaller amounts for first-time and administrative breaches — for example, the penalty on a legal representative who fails to notify the Authority of their appointment is cut sharply.
- Restructured late-payment charges. The way charges accrue on tax paid after its due date is revised, moving toward a clearer, time-based calculation on the outstanding amount.
- Recalibrated voluntary-disclosure penalties. The penalty for correcting an error through voluntary disclosure is restructured to distinguish disclosures made before the Authority notifies an audit from those made afterwards, rewarding earlier correction.
- Harmonised concepts across taxes. Definitions, deadlines and procedural concepts are aligned so that a penalty decision under VAT, Excise or Corporate Tax rests on the same building blocks.
The specific figures and thresholds are set out in the schedule to the amended decision. Where a precise amount matters to a decision, it should be confirmed against the enacted Arabic text, which prevails over any English summary.
Practical implications
For registered businesses, the effective date creates a clear before-and-after line. Errors identified and disclosed before 14 April 2026 may attract different — and in several cases lower — charges than the same errors surfaced later or during an audit. That makes the pre-effective-date window commercially significant: it is an opportunity to reconcile filed returns, resolve known underpayments, and update registration and contact details held by the Authority before the amended regime bites.
The harmonisation of definitions also reduces the room for inconsistent treatment across tax types, which should make penalty exposure easier to model. Finance teams that have built controls around the 2017 schedule will need to re-map those controls to the amended amounts and timelines. Businesses with live reconsideration, instalment or waiver applications should factor the transition into their strategy, as the framing of any correction can affect the penalty ultimately assessed.
Directly affected: VAT- and Excise-registered persons, taxable persons under the Tax Procedures Law, tax agents and legal representatives.
Action points
- Reconcile filed VAT and Excise returns and identify any errors or underpayments before 14 April 2026.
- Assess whether a voluntary disclosure filed before the effective date improves your penalty position, and sequence disclosures accordingly.
- Update registration details, legal-representative appointments and contact information held by the FTA to avoid notification-related penalties.
- Re-map internal tax-compliance controls and penalty models from the 2017 schedule to the amended amounts and timelines.
- Review any pending reconsideration, instalment or waiver applications with the transition in mind, and take advice where the enacted figures are decisive.
Disputes and enforcement
Because the amended schedule applies from 14 April 2026, the timing of a disclosure or correction can change the penalty a business faces — and the analysis of which schedule governs a given period will feature in reconsideration requests, waiver applications and appeals to the Tax Disputes Resolution Committee. Taxpayers with exposure should confirm the applicable amounts against the enacted Arabic text before conceding any assessment, and should treat the pre-effective-date window as part of their dispute strategy rather than a purely administrative deadline.
Sources and authorities
Cabinet Decision No. 129 of 2025, amending Cabinet Decision No. 40 of 2017 on the administrative penalties imposed for violations of tax laws in the UAE. Announced by the Federal Tax Authority; effective 14 April 2026.
Federal Tax Authority — Media Centre / News (tax.gov.ae)
Original-source date: 9 October 2025 (issued) · Captured: 2026-06-20T08:00Z · Verified: 2 July 2026
Instrument details
Full name: Cabinet Decision No. 129 of 2025 amending certain provisions of Cabinet Decision No. 40 of 2017 on the administrative penalties imposed for violations of tax laws in the UAE.
Issued: 9 October 2025. Published: on the Federal Tax Authority portal, November 2025. Effective: 14 April 2026.
Amends / repeals: amends (does not repeal) Cabinet Decision No. 40 of 2017; the amended schedule replaces the corresponding penalty entries once it takes effect.
Scope: administrative penalties under the Tax Procedures Law, the VAT Law and the Excise Tax Law, with definitions and timelines harmonised across VAT, Excise and Corporate Tax.
Note: the enacted Arabic text is authoritative. Where a specific penalty amount, percentage or deadline is decisive, confirm it against the official Arabic version before relying on any English summary.
Based on Cabinet Decision No. 129 of 2025 (amending Cabinet Decision No. 40 of 2017) and cross-checked against leading practitioner analyses. General information only — it does not constitute legal advice, and the enacted Arabic text prevails. For advice on a specific matter, please contact us. Last updated: 2 July 2026.