UAE VAT penalties changed on 14 April 2026, when Cabinet Decision No. 129 of 2025 came into force. Late VAT registration costs AED 10,000. A late VAT return costs AED 1,000, or AED 2,000 if repeated within 24 months. Late payment is charged at 14% a year, applied monthly on the unpaid tax.
The Federal Tax Authority (FTA) says the new decision reduces many penalties and changes how others are calculated.
Source: FTA
VAT Penalties at a Glance
| Violation | Penalty (AED) |
|---|---|
| Late VAT registration | 10,000 |
| Late deregistration application | 1,000 a month, up to 10,000 |
| Not telling the FTA about changes to your tax record | 1,000; 5,000 if repeated within 24 months |
| Late VAT return | 1,000; 2,000 if repeated within 24 months |
| Late payment of VAT | 14% a year, charged monthly on the unpaid amount |
| Incorrect VAT return | 500 (see exceptions below) |
| Not keeping required records | 10,000; 20,000 if repeated within 24 months |
| Not issuing a tax invoice or tax credit note | 2,500 for each case |
| Not showing prices including VAT | 5,000 |
Source: Ministry of Finance: Cabinet Decision No. 40 of 2017 and its amendments
Late Registration
If your taxable supplies go over AED 375,000, you must apply to register within the set time. Applying late carries a penalty of AED 10,000. See our VAT registration guide.
Late VAT Returns
Filing a VAT return late costs AED 1,000 the first time, and AED 2,000 if it happens again within 24 months. See our VAT return filing guide.
Late Payment
Unpaid VAT attracts a monthly penalty at a rate of 14% a year, for each month or part of a month. It is charged on the unpaid amount from the day after the due date, and on the same date each month after that. For voluntary disclosures and tax assessments, the due date is 20 business days from when they are submitted or received.
Errors and Voluntary Disclosures
- Incorrect return: AED 500, unless you correct it before the filing deadline, or file a voluntary disclosure that doesn't change the tax due.
- Voluntary disclosure: a monthly penalty of 1% of the tax difference, from the day after the return was due until you file the disclosure.
- Disclosure only after an audit notice: a fixed 15% of the tax difference, plus the monthly 1%.
Fixing errors early, before the FTA contacts you, keeps the penalty lower.
Invoices, Records and Prices
- Not issuing a tax invoice or tax credit note: AED 2,500 for each case
- Not meeting the conditions for electronic invoices or credit notes: AED 2,500 for each case
- Not keeping the required records: AED 10,000, or AED 20,000 if repeated within 24 months
- Not showing prices including VAT: AED 5,000
Good bookkeeping avoids most of these. See our bookkeeping requirements guide.
How to Avoid VAT Penalties
- Track your sales against the AED 375,000 threshold and register on time.
- File every VAT return and pay by the due date.
- Issue proper tax invoices and credit notes.
- Keep your tax record up to date with the FTA.
- Correct errors quickly with a voluntary disclosure.
The figures above are from the Ministry of Finance's consolidated text, which notes it is not an official translation. The official Gazette text prevails.
Frequently Asked Questions
What is the penalty for late VAT registration in the UAE?
AED 10,000.
What is the penalty for filing a VAT return late?
AED 1,000 the first time, and AED 2,000 if repeated within 24 months.
How is the late payment penalty calculated?
At 14% a year, charged monthly on the unpaid tax, for each month or part of a month.
When did the new VAT penalties start?
On 14 April 2026, when Cabinet Decision No. 129 of 2025 came into force.
Can I reduce a penalty by correcting a mistake myself?
Yes. Correcting a return before the deadline, or filing a voluntary disclosure before an audit notice, keeps the penalty lower.
Note: This article provides general information only and is not tax advice. Confirm the current requirements with the Federal Tax Authority or a qualified tax professional.