UAE Tax Penalties Reset 2026: The New 14 April Regime

• 07 August, 2026
• By Safwan, Managing Partner
• Tax Compliance

Last reviewed 7 August 2026 by the Exiloz tax team against the UAE legislation in force on that date. Tax law moves — confirm any figure against tax.gov.ae before you act on it.

The penalties changed, and mostly in your favour

From 14 April 2026, Cabinet Decision No. 129 of 2025 resets the UAE’s administrative tax-penalty schedule, replacing the previous penalties decision and cutting several fixed penalties outright: for example, the failure to keep records in Arabic drops from AED 20,000 to AED 5,000. It is not a general amnesty, and it does not touch the substantive VAT and corporate-tax rates. Running alongside it, Federal Decree-Law No. 17 of 2025 (in force from 1 January 2026) rewrites the Tax Procedures Law: it extends the FTA’s audit window to 15 years for tax evasion and non-registration cases, keeps a 5-year limit on refunds, and opens a one-year window, to roughly 31 December 2026, to reclaim pre-2026 credit balances that had expired. If you would rather not handle this in house, this is what our penalty reconsideration support covers.

Two things happened at once, and finance teams keep reading only the good half. Yes, some penalties got cheaper. But the same package that softened the fixed fines also handed the FTA a much longer reach on the cases it cares about, evasion and businesses that never registered. So the honest summary is: lower cost for ordinary slip-ups, higher stakes for the serious ones. Read both halves before you relax.

What Cabinet Decision 129 of 2025 changes

The core move is a re-pricing of administrative penalties — the fixed and percentage fines for late registration, late filing, incorrect returns, and record-keeping failures — effective 14 April 2026. Several fixed amounts come down. The headline example everyone cites is the Arabic-records failure falling from AED 20,000 to AED 5,000. The intent, per the Ministry of Finance framing, is proportionality: penalties that match the severity of the breach rather than a flat heavy number for a paperwork slip.

A worked example: the Arabic-records penalty

Take a Deira trading LLC that keeps its books in English only. Under the old schedule, an FTA review flags the record-keeping failure and the fixed penalty is AED 20,000. The same finding raised after 14 April 2026 is priced at AED 5,000, a straight AED 15,000 difference for an identical breach. Useful to know. But do not read it as “records in English are fine now.” The obligation is unchanged; only the price of failing it moved. If you get the review before the effective date, the old number can still apply, which is exactly the kind of timing detail that decides a case.

The other half: a 15-year audit window

This is the part that changes how long you keep everything. Federal Decree-Law No. 17 of 2025 amended the Tax Procedures Law from 1 January 2026 and extends the period in which the FTA can audit and assess to 15 years where it alleges tax evasion or where a business failed to register. The ordinary look-back stays shorter, but for those two categories the clock runs far longer than the five years most owners assume. In practice, that means your record-retention policy is no longer “keep for five years and shred”, not if there is any registration or evasion exposure in your history.

The refund and credit-reclaim window

FDL 17 of 2025 keeps a 5-year limit on how far back you can claim a refund, miss it and the money is gone. But it also opens a one-off transition window, running to roughly 31 December 2026, to reclaim pre-2026 credit balances that had already expired under the old rules. If you wrote off an old VAT or tax credit as lost, this is the year to revisit it. It is a genuine “check the ledger now” item, because the window does not reopen.

How to respond, step by step

1. Re-read your penalty exposure: list any open or likely administrative penalties and check whether the new lower amounts apply from 14 April 2026.
2. Fix the underlying breach anyway: a cheaper penalty is still a penalty: correct records, registrations and filings so it does not recur.
3. Extend record retention: if you have any registration or evasion exposure, keep records well beyond five years to cover the 15-year window.
4. Comb the ledger for expired credits: identify pre-2026 credit balances written off as lost and reclaim them before the ~31 December 2026 window closes.
5. Use voluntary disclosure where needed: correcting an error yourself before the FTA finds it is almost always cheaper than an assessment.

Common mistakes

The legal basis

The penalty re-pricing sits in Cabinet Decision No. 129 of 2025, effective 14 April 2026, which replaces the earlier administrative-penalties decision (Cabinet Decision No. 108 of 2021). The procedural changes (the extended audit window and the refund and reclaim rules) sit in Federal Decree-Law No. 17 of 2025 amending the Tax Procedures Law, in force from 1 January 2026. As always, confirm the specific amounts and dates against tax.gov.ae before you act on a live case. If a penalty is already on your account, our tax consultants assess whether the new schedule reduces it and whether a voluntary disclosure is the cheaper route.

Where this leaves you

Net-net: the ordinary compliance slip costs less than it did, which is welcome, but the FTA can now look back much further on the cases that matter, and there is real money to reclaim if you move before year-end. This is the numbers-and-audit-window update to our earlier post on penalties and voluntary disclosure; pair it with our guide to the FTA tax audit if you want to understand how the longer window plays out in practice.

Frequently Asked Questions