UAE Cabinet Decision No. 129 of 2025: A New Era of Tax Penalty Reform
The UAE has issued Cabinet Decision No. 129 of 2025, which replaces the previous Cabinet Decision No. 108 of 2021 and introduces a modernized and more balanced penalty regime for violations of UAE tax laws.
The new framework—effective 14 April 2026—marks a significant shift toward simplifying compliance, promoting fairness, and encouraging voluntary correction by taxpayers before the Federal Tax Authority (FTA) initiates an audit.
We have prepared a comparative summary highlighting the key penalties introduced under the New Decision compared to those imposed under the previous Cabinet Decision No. 108 of 2021.
Key Updates and Comparative Changes
Below is a summary of the most notable revisions compared to the prior Cabinet Decision No. 108 of 2021:
| Violation Description | Old Decision (108/2021) | New Decision (129/2025) |
| Failure to keep required records | • AED 10,000 (first)
• AED 20,000 (repeat) |
• AED 1,000 per violation
• AED 20,000 (if repeated within 24 months) |
| Failure to submit data in Arabic | • AED 20,000 | • AED 5,000 |
| Failure to update tax record information | • AED 5,000 (first)
• AED 10,000 (repeat) |
• AED 1,000 per violation
• AED 5,000 (if repeated within 24 months) |
| Failure to notify appointment of a legal representative | • AED 10,000 | • AED 1,000 |
| Late payment of payable tax | • 2% immediate + 4% monthly (max 300%) | • 14% per annum (≈1.17% monthly) |
| Submitting an incorrect tax return | • AED 1,000 (first)
• AED 2,000 (repeat) or % of tax difference |
• AED 500 (if tax difference exists);
• Nil if corrected voluntarily before deadline |
| Voluntary Disclosure (VD) | • 5%–40% penalty based on time elapsed | • 1% monthly penalty on the tax difference |
| Failure to submit VD before audit | • 50% of error amount + 4% monthly | • 15% fixed penalty + 1% monthly |
| Failure to calculate tax on behalf of another | • 2% immediate + 4% monthly (max 300%) | • 14% per annum |
Effective Date and Transition
The new penalties take effect on 14 April 2026.
Businesses have until then to:
- Review tax reporting systems and filing accuracy.
- Implement timely reconciliation processes.
- Establish internal review and self-audit controls to detect errors before FTA audits.
How We Can Help
Our Tax Advisory Team can assist you with:
- Reviewing your current penalty exposure under the old regime.
- Conducting compliance risk assessments.
- Advising on voluntary disclosure and FTA communication strategy.
- Preparing for the transition to the new penalty framework.
For tailored support or further guidance, please get in touch with our tax team at tax@xb4.com.
