FTA penalties
FTA penalties: the cheapest place to win the argument is the first one.
A voluntary disclosure costs 1% a month. A reconsideration costs nothing and needs nothing paid. The disputes committee will not look at you until the tax is settled in full. We tell you which door you are actually standing in front of.
Which situation you are in
You found the error, or the FTA did. The routes are not the same.
If you found it, the route is a voluntary disclosure. It is a correction you make, with your reason and your evidence attached, before anyone asks.
If the FTA has issued something against you, a penalty, an assessment, a refusal, the route is a challenge. There are two of those, and most people only know about one. A tax assessment review request under Article 28 of the Tax Procedures Law goes first where the decision is a tax assessment. A reconsideration request under Article 29 covers any decision the FTA has issued.
The order matters, because Article 29 says you cannot file a reconsideration on an assessment while a review request on it is still open, and Article 28 gives you a fresh 40 business days for the reconsideration once the review is decided or the FTA's own deadline runs out. Used properly the review is a free extra round. Used carelessly it burns the one you had.
Both routes are worked in the same place, on the same file. The one thing that never helps is doing nothing, because a late return penalty runs monthly and a late payment penalty runs at 14% a year for as long as the tax sits unpaid.
Voluntary disclosure
Twenty business days, and a threshold that decides the form it takes.
Article 10 of the Tax Procedures Law makes a disclosure compulsory where a return, an assessment or a refund application understated the tax. Where the tax was overstated in your favor the other way, a disclosure is optional.
The Executive Regulation sets the timing. Above AED 10,000 of difference, the disclosure is due within 20 business days of the day you became aware of the error. At AED 10,000 or less you do not file a disclosure at all: you correct it in a return, either a return for an earlier period that is not yet due or the return for the period in which you found the error, whichever comes first. Only where there is no such return does the 20 business day disclosure apply.
One rule changed on 1 January 2026 and most published guidance has not caught up. Where the error makes no difference to the tax at all, the old law required a voluntary disclosure anyway. Federal Decree-Law 17 of 2025 replaced that: a disclosure is now required only in the cases the FTA specifies, and otherwise the error is corrected in a return. We have not found a published FTA list of those cases, so on a no-difference error we check the current position before filing rather than assume it.
What a disclosure costs
| Situation | Penalty |
|---|---|
| You disclose before the FTA notifies you of an audit | 1% a month on the tax difference, from the day after the original due date until the disclosure is submitted |
| You have not disclosed by the time an audit is notified | 15% of the tax difference, fixed, plus 1% a month |
The same two rows apply to VAT and excise under Cabinet Decision 129 of 2025 and to corporate tax under Cabinet Decision 75 of 2023. The older fixed disclosure penalties of AED 1,000 and AED 2,000, and the escalating scale that rose to 40%, both belong to earlier versions of the law and are still quoted in places. They are not the current rule.
The tax found in a disclosure is due within 20 business days of submitting it. After that the late payment penalty starts, so a disclosure filed without the money ready simply moves the problem.
Challenging a decision
Four steps, and the price of admission rises at each one.
| Step | Deadline to file | What must be paid first | Time the body has |
|---|---|---|---|
| Tax assessment review Article 28, assessments and their penalties only | 40 business days from notification | Nothing | 40 business days to decide, 5 to notify |
| Reconsideration Article 29, any FTA decision | 40 business days from notification | Nothing | 40 business days to decide, 5 to notify, extendable by 20 |
| Tax Disputes Resolution Committee Articles 30 to 33 | 40 business days from the reconsideration decision | The tax, in full | 20 business days to decide, 5 to notify, extendable by 60 |
| The competent court Article 36 | 40 business days from the committee's decision | The tax in full, and at least 50% of the penalties, in cash or by an approved bank guarantee | The court's own timetable |
Two hard gates sit in that table. A committee objection is refused outright if no reconsideration was filed first. And where the total tax and penalties come to AED 100,000 or less, the committee's decision is final and there is no court after it. The committee is chaired by a member of the judiciary with two registered tax experts sitting beside them.
Who may speak for you
A Tax Agent is on a register, is linked to your account, and answers for what is filed.
Article 12 of the Tax Procedures Law says no person may practice as a Tax Agent unless they meet the conditions, are listed in the FTA's register, and hold a license from the competent local authority. Article 14 lets an agent act in your name and on your behalf, and says plainly that this does not remove your own responsibility. Our Tax Agent holds TAAN 20024196.
Corporate tax penalties
What the current table says.
| Failure | Penalty |
|---|---|
| Late registration | AED 10,000 |
| Late return | AED 500 a month for the first 12 months, then AED 1,000 a month |
| Late payment | 14% a year, charged monthly on the unpaid tax |
| Late deregistration | AED 1,000 a month, to a maximum of AED 10,000 |
| Records not kept | AED 10,000, or AED 20,000 on a repeat within 24 months |
| Records not given in Arabic when asked | AED 5,000 |
| Obstructing a tax auditor | AED 20,000 |
Cabinet Decision 75 of 2023 and its amendments. The late payment clock starts 20 business days after a voluntary disclosure is submitted, or 20 business days after a tax assessment is received. The decision sets no ceiling on it.
VAT and excise penalties
The late payment rule changed this year.
| Failure | Penalty |
|---|---|
| Late registration | AED 10,000 |
| Late return, first time | AED 1,000 |
| Late return, repeated within 24 months | AED 2,000 |
| Late payment | 14% a year, charged monthly on the unpaid tax |
| Late deregistration | AED 1,000 a month, to a maximum of AED 10,000 |
Cabinet Decision 129 of 2025 replaced the VAT and excise penalty table with effect from 14 April 2026, and the late payment penalty now reads the same as the corporate tax one. Pages still quoting 2% on the day, then 4% a month to a cap of 300%, are quoting a table that has been replaced.
Two deadlines are easy to mix up. A VAT registration application is due within 30 days of the obligation arising. A VAT deregistration application is due within 20 business days. One is calendar days, the other is business days.
The late registration waiver
The corporate tax AED 10,000 can still be removed, and refunded if you paid it.
The FTA's public clarification CTP006 sets out a Cabinet approved waiver of the corporate tax late registration penalty. It has been in effect since 14 April 2025 and it reaches back to penalties from 1 June 2023.
The condition is a single one, and it is a filing condition rather than an application. A taxable person has to submit the tax return for its first tax period within seven months of the end of that period instead of the usual nine. An exempt person has to submit its annual declaration within seven months of the end of its first financial year. There is no separate waiver form.
A penalty already paid is not lost. The clarification says the AED 10,000 is credited automatically to the person's EmaraTax corporate tax account. If a reconsideration request on that penalty is still open when the waiver applies, it becomes null and void, and where a reconsideration was already granted there is no second waiver.
Filing early does not move the payment date. The clarification is explicit that the corporate tax itself is still payable within nine months of the end of the first tax period. Filing in month seven to catch the waiver, then paying in month nine, is the correct sequence. See Corporate tax for the return itself.
The waiver covers the first tax period only. It is not a general amnesty, and no FTA source we could find publishes the number of the Cabinet Decision behind it, so we cite the clarification rather than a decision number.
Instalments and waivers
A separate route, for a penalty that is already final.
Cabinet Decision 105 of 2021 lets a committee at the FTA allow a penalty to be paid in instalments, or waive it, or refund one already collected. It has run since 1 March 2022.
- Instalments need four things. The penalty unsettled, at least AED 50,000, not under dispute at the committee or the courts, and no tax outstanding for the period concerned. A pending reconsideration does not block it.
- A waiver needs a listed ground. Nine are named, among them the death or serious illness of a registered natural person or a sole establishment's owner, the death, illness or resignation of a key employee, a government restriction, a custodial sentence, insolvency or bankruptcy, and a general failure of the FTA's own systems or payment gateways.
- One request per penalty. The application carries an undertaking: to keep to the payment plan, or to have corrected the violation and not repeat it.
- Silence is a refusal. The committee has 60 business days from the matter reaching it. No answer in that time counts as a rejection, and that rejection is final. The FTA's published end to end time is up to 110 business days.
A refund can reach back over penalties collected in the previous five years, credited to the tax account, or paid out where the person is no longer registered.
During an audit
The weeks between the notice and the assessment.
An FTA tax audit does not begin with a decision. It begins with a notice and a list, and most of what follows is documents: the ledgers behind a period, the invoices behind a figure, the contracts behind a treatment, and an explanation of each in language the auditor can accept. What you send in those weeks is what the assessment is built from.
- 01
The document request
We take the list, map it to what your books actually hold, and tell you where the gaps are before they are sent rather than after. Where a document does not exist, saying so early with an explanation is a far better position than an unanswered item.
- 02
The correspondence
Every reply goes through one file, in one voice, with the dates recorded. Answers given quickly by different people in different emails are where most avoidable adjustments come from.
- 03
The disclosure decision
If the review finds an error before the FTA does, a voluntary disclosure may still be open, and it is much cheaper than waiting. Once the audit notice has arrived a fixed 15% is added to the 1% a month, so the decision belongs in the first week, not the last.
ANCPA is a registered FTA Tax Agent, number 20024196, so we can be linked to your account and correspond with the Authority as your agent rather than through you.
Questions we are asked when a notice has already arrived
- 01
We found a mistake in a filed return. How long do we have?
If the tax difference is more than AED 10,000, a voluntary disclosure is due within 20 business days of the day you became aware of the error. If it is AED 10,000 or less you correct it in a return instead, either the return for a previous period that is not yet due or the return for the period you found it in, whichever comes first.
- 02
Is it better to disclose or to wait and see?
Disclose. A voluntary disclosure carries 1% a month on the tax difference, running from the day after the original return was due until the disclosure goes in. If you have not disclosed by the time the FTA notifies you of a tax audit, a fixed 15% of the tax difference is added on top of that 1% a month. Waiting only makes the number larger.
- 03
The FTA has issued a decision against us. What is the deadline?
40 business days from the day you were notified, for a reconsideration under Article 29, with reasons stated. Where the decision is a tax assessment there is an earlier route: a tax assessment review under Article 28, also within 40 business days, which covers the assessment and the penalties attached to it and gives you a fresh 40 business days for the reconsideration afterward.
- 04
Do we have to pay before we can object?
Not for a reconsideration. The Tax Disputes Resolution Committee will not accept an objection unless the tax is paid in full and a reconsideration was filed first. The court will not hear an appeal unless the tax is paid in full and at least 50% of the penalties are settled in cash or covered by an approved bank guarantee.
- 05
Does the FTA want everything in Arabic?
Arabic is the default under Article 5 of the Tax Procedures Law. The FTA may accept another language and may then ask for a legally approved Arabic translation, at your cost, within the time it sets. Failing to produce records in Arabic when asked is a AED 5,000 penalty.
- 06
What does it cost?
A fixed fee, quoted within one business day of seeing the notice or the return in question, before any work starts. A reconsideration request itself carries no FTA fee.
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