In brief
In October 2025, the UAE Cabinet approved Cabinet Decision No. 129 of 2025, introducing significant changes to the administrative penalties applicable to violations of UAE tax laws. This decision reflects the government’s ongoing commitment to improving tax compliance and fostering a transparent, predictable, and business-friendly environment.
The decision was officially published on 10 November 2025 and will come into effect on 14 April 2026. Businesses should use this transition period to review their compliance processes and prepare for the new penalty framework.
Key highlights of the amendments
- Expanded and clarified key definitions: “Tax Law” redefined for this Cabinet Decision to include Excise Tax Law and Value Added Tax (VAT) Law. Expanded and clarified key definitions: Excise Tax, VAT, Due Tax, Tax Audit, and Tax Difference.
- Simplified penalty regime: The new framework replaces the previous compounding penalty system with a non-compounding structure, reducing complexity and making penalties easier to calculate and understand.
- Encouragement of voluntary compliance: The regime incentivises self-assessment and voluntary correction of errors, allowing taxpayers to rectify mistakes without facing disproportionate penalties.
- Harmonisation across Tax Laws: Penalty provisions are now aligned across Tax Procedures Law, VAT, Excise Tax regulations, and Corporate Tax legislation ensuring consistency and clarity.
- Enhanced transparency and predictability: By clearly defining penalty structures, the decision aims to improve certainty of potential tax exposure, enabling businesses to manage risks effectively.
- Business-friendly approach: The changes support a governance model that prioritises ease of doing business and strengthens trust between taxpayers and the Federal Tax Authority (FTA).
Access the official decision
The full text of Cabinet Decision No. 129 of 2025 is available on the UAE FTA website here.
Key amendments introduced in Cabinet Decision No. 129 of 2025
| Description of violation | Amendments introduced | |
Item 2, Table 1 Failure to submit requested information in Arabic |
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Item 5, Table 1
Failure to update tax record kept by the FTA |
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Item 6, Table 1 Failure to notify appointment of Legal Representative |
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Item 9, Table 1 Failure to pay Payable Tax on time |
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Item 10, Table 1
Incorrect Tax Return |
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Item 11, Table 1 Voluntary Disclosures |
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Item 12, Table 1
Voluntary Disclosures after audit notification is issued |
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Item 14, Table 1
Failure to calculate tax on behalf of another person |
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Item 4 and 5, Table 3
Failure to issue a tax invoice / tax credit note or alternative document |
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Suggested next steps
- With the recent amendments to the UAE Administrative Penalties regime, businesses face heightened obligations under the Tax Procedures Law, VAT and Excise Tax Legislations and the new e-Invoicing framework. Non-compliance can lead to significant penalties, impacting both operations and reputation.
- PwC’s Indirect Tax specialists work closely with businesses to proactively manage compliance, implement technology-enabled solutions, and minimise the risk of penalties.
- Should penalties arise, our Tax Dispute and Litigation team is ready to support you in navigating appeals and resolving disputes efficiently.
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United Arab Emirates: Revised administrative penalty framework for violation of tax laws
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Jochem Rossel
Partner, Middle East Tax & Legal Services Leader, PwC Middle East
Steven Cawdron
Partner, Transfer Pricing, Tax & Legal Services, PwC Middle East
Chadi Abou Chakra
Partner, ME Indirect Tax Network lead, Tax & Legal Services, KSA, PwC Middle East
Carlos Garcia
Partner, ME Customs and International Trade lead, Tax & Legal Services, PwC Middle East
Maher ElAawar
Ishan Kathuria
Partner, UAE e-invoicing Lead, Tax & Legal Services, PwC Middle East
Omara Islam
Partner, Connected Tax Compliance & Indirect Tax, Tax & Legal Services, PwC Middle East
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