The UAE's Cabinet Decision No. 129 of 2025 shifts to a compliance-focused tax penalty model, effective April 2026. Key changes include replacing punitive late payment penalties with a 14% annual non-compounding rate, reducing fixed penalties on FTA-discovered errors to 15%, and modifying voluntary disclosures to 1% monthly. Businesses must reassess tax strategies accordingly.
UAE Unveils Comprehensive Reform of Tax Penalty System
Public
Other countries
Author: Ema Stamenković
Category:
General information
Views:
53
Content accuracy validation date:
13.11.2025
Content accuracy validation time:
10:28h
UAE introduces pro-taxpayer administrative penalty reform via Cabinet Decision No. 129 of 2025, effective 14 April 2026, shifting from punitive to compliance-focused model.
Main Changes:
- Late payment penalty (Cl. 9, 14): Abolishes 2% initial + 4% monthly (max 300%); replaces with non-compounding 14% per annum (~167%/month) on unsettled amount from day after due date. Applies to unpaid tax and RCM errors.
- Voluntary Disclosures (VD) (Cl. 11): Replaces yearly brackets (5–40%) with 1% per month on tax difference from original due date.
- FTA-discovered errors (Cl. 12): Fixed penalty slashed from 50% to 15% + 1% monthly (was 4%) on tax difference.
- Encourages rapid correction and lowers non-compliance risk.
Businesses must immediately review tax strategies and provisions.
Table: Old vs. New Penalties (AED):
| Issue / Clause | Old (CD 49/2021) | New (CD 129/2025) | Difference |
|
(Table 1, Cl. 1) Failure to keep records |
10,000 (first); 20,000 (repeat) |
1,000 per violation; 20,000 if repeated within 24 months |
First: 10k → 1k per; Repeat clarified (24 months) |
| (Table 1, Cl. 2) Failure to submit records in Arabic |
20,000 |
5,000 |
Reduced 75% |
| (Table 1, Cl. 5) Failure to inform of amendment need |
5,000 (first); 10,000 (repeat) |
1,000 per violation; 5,000 if repeated within 24 months |
First: 5k → 1k; Repeat: 10k → 5k + 24-month rule |
| (Table 1, Cl. 6) Legal rep fails to inform of appointment | 10,000 |
1,000 |
Reduced 90% |
| (Table 1, Cl. 9) Failure to pay tax | 2% day after due; +4% monthly on unsettled |
14% p.a. per month/part on unsettled from day after due |
Entire model replaced |
| (Table 1, Cl. 10) Incorrect Tax Return (Fixed) | 1,000 (first), 2,000 (repeat); or tax diff if < penalty (min 500) |
Flat 500; No penalty if VD with zero tax diff |
Flat 500; New safe harbor for non-tax VDs |
| (Table 1, Cl. 11) VD | 5% (Yr1), 10% (Yr2), 20% (Yr3), 30% (Yr4), 40% (after) |
1% per month/part from due date to VD |
Yearly → monthly accrual |
| (Table 1, Cl. 12) No VD before audit | 50% + 4%/month on unpaid from due to assessment |
15% + 1%/month on tax diff from due to VD/assessment |
50% → 15%; 4% → 1% monthly |
| (Table 1, Cl. 14) RCM tax miscalculation |
Same as Cl. 9 |
14% p.a. per month/part |
Same as Cl. 9 change |
PDF Cabinet Decision No. 40 of 2017 and its Amendments: https://mof.gov.ae/wp-content/uploads/2025/11/Cabinet-Decision-No.-40-of-2017-and-its-amendments.pdf
Other news from Other countries
Vietnam: VAT Deductibility on Donated or Gifted Goods
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The company can deduct input VAT for taxable outputs from gifts, employee gifts, and scrap sales, either fully or proportionally based on taxable revenue, depending on accounting methods. Company produces tax-exempt animal feed, so generally cannot deduct input VAT. However, it generates taxable outputs via gifts, employee gifts, or scrap sales and asks if input VAT deduction is allowed for these.... Read more
Important Changes to UAE VAT Registration and Deregistration
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Cabinet Decision No. 100 of 2024 updates VAT registration and deregistration processes in the UAE. Key changes include updated thresholds for mandatory and voluntary registration, streamlined deregistration procedures, revised tax group rules, and new exemption conditions. Businesses must reassess their compliance to avoid penalties and ensure efficient VAT management ahead of 2025. The processes... Read more
VAT Requirements for Foreign Digital Service Providers in Switzerland
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Foreign businesses offering digital services to Swiss customers might have Swiss VAT obligations based on service type, supply location, and registration criteria. Telecommunications and electronic services face special rules, with a CHF 100,000 turnover threshold necessitating registration for B2C providers. Electronic services cover cloud/SaaS, downloads, apps, and AI. The place of supply for B2... Read more
Brazil Postpones NFC-e (B2B) Ban to January 5, 2026
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
Brazil has postponed the ban on issuing NFC-e (model 65) for transactions with legal entities (CNPJ) to January 5, 2026, giving businesses two extra months to transition to NF-e (model 55) for all B2B sales. The change reinforces the distinction between retail consumer invoices and corporate transactions, supporting national tax standardization under SPED. Companies must update systems, ensure cor... Read more
How Tourists Can Claim a VAT Refund in Thailand
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
Tourists in Thailand can get a VAT refund on goods taken out of the country within 60 days. You must shop at approved stores, spend at least 2,000 THB (52.64 Euros) per store per day, keep receipts, and get a P.P.10 form. At the airport, have customs inspect your items and then claim your refund after immigration. Refund amounts depend on how much you spend, and luxury items require extra checks.... Read more
Introduction to New Zealand’s New e-Invoicing Requirement for Large Suppliers
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
New Zealand's Government Procurement Rules will require large suppliers to issue e-invoices for domestic transactions from 1 January 2027. This is aimed at promoting efficiency and transparency, and may exclude international suppliers and foreign currency transactions. The rule applies to domestic transactions in New Zealand dollars, excluding international suppliers and cross-border transactions.... Read more