10 October 2026 · 2026 Change
What Changed for VAT Disclosures in 2026?
The Federal Tax Authority says Cabinet Decision No. 129 of 2025 took effect on 14 April 2026 and changed the UAE administrative-penalty schedule. The current schedule applies 1% of the Tax Difference per month or part for a submitted Voluntary Disclosure, while failing to disclose before an audit notice can add a 15% fixed charge. Unpaid tax can also attract 14% per annum charged monthly.
Need this handled for your business? Voluntary disclosure preparation support covers the scope, records to prepare and how to request a quote.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
Use the rate that applies now
The current figures come from the administrative penalty table published by the Ministry of Finance. The Federal Tax Authority announced that Cabinet Decision No. 129 of 2025 took effect on 14 April 2026. For a Voluntary Disclosure correcting an error, the table applies 1% of the Tax Difference for each month or part from the relevant date until submission. The tax itself remains payable. Save the dated source with the calculation.
The table separates three events that owners often blend together: a submitted Voluntary Disclosure, failure to disclose before an audit notification and unpaid Payable Tax. The first uses 1% monthly on the Tax Difference. The second adds a fixed 15% on that difference and the monthly calculation. The third uses 14% per annum for each month or part after the payment due date. They are different triggers with different starting points.
The source table is what makes the claim testable. Use the version that records Cabinet Decision No. 129 of 2025 and its effective date, not an undated summary. The FTA announcement confirms entry into force on 14 April 2026. If a spreadsheet gives a different result, stop and rebuild the calculation from the Ministry of Finance table before anyone approves the disclosure.
| Event | Current rule | Starting point |
|---|---|---|
| Disclosure submitted | 1% per month or part on the Tax Difference | Relevant return, refund application or assessment |
| No disclosure before audit notice | 15% fixed plus 1% per month or part | Relevant date until disclosure or assessment |
| Payable Tax unpaid | 14% per annum for each month or part | Day after payment due date |
Build the calculation from dates
Penalty work starts with dates from the file: the affected VAT return due date, the date a refund application was submitted or an assessment was notified, the date the error was found, the date a Voluntary Disclosure was submitted and the date any audit notification was received. The formula cannot be checked without those records. Put the dates in one signed chronology before calculating the amount.
For a Voluntary Disclosure, the Ministry of Finance table states that the payment due date is 20 Business Days from submission. If Payable Tax remains unsettled after that date, the late-payment rule can apply. Save the EmaraTax submission record and payment reference. They are stronger evidence than a calendar note typed after the event, especially when the disclosure date and payment date were handled by different people.
If you are deciding whether to submit now, separate urgency from accuracy. An audit notification changes the penalty position, but a rushed calculation can misstate the Tax Difference. We would freeze the return, ledger and date evidence first, then submit a corrected figure with an explanation another reviewer can follow. Record who confirmed the chronology and keep the source documents behind each date.
Show the base before the percentage
Example, not an FTA assessment: a corrected return produces a Tax Difference of AED 24,000. The Voluntary Disclosure is submitted after two monthly penalty periods. The disclosure penalty is AED 24,000 x 1% x 2 = AED 480. The tax and that disclosure penalty total AED 24,000 + AED 480 = AED 24,480. Any assistance fee is a separate private charge and is not part of this statutory arithmetic.
That calculation is only useful when the base is proved. The preparer must show why the Tax Difference is AED 24,000, which return created it and which dates make two monthly periods. If the FTA had already notified the business of a Tax Audit before submission, the fixed 15% rule must also be tested against the file. Do not hide that second question inside one percentage.
The mistake we see most is asking for a penalty percentage before calculating the Tax Difference. Start with the filed return, corrected return and dated submission records. A percentage applied to the wrong base produces a neat answer that does not describe the liability. The person approving the submission should see the return comparison, the period count and the arithmetic on the same page.
Know what an assistance fee covers
A private assistance quote is driven by work in the file, not by a government tariff. Ask whether the scope covers one return or several, a clean ledger or a reconstruction, a standard error or a refund or assessment, and whether an audit notification has arrived. Ask separately for the calculation, explanation, EmaraTax preparation and follow-up. The quote should name each deliverable and the records the client must supply.
We would not compare quotes by the headline fee alone. Compare the documents each quote promises to review and the handover it will leave. A low figure that covers only data entry may leave the business to prove the Tax Difference, answer FTA questions and track payment. The number of returns, condition of the records and need for period-by-period work are real drivers of private effort.
Exiloz is not an FTA-accredited e-invoicing Service Provider, is not a registered Tax Agent and does not perform statutory audits. Assistance described here is preparation, reconciliation and submission support. The FTA remains the authority on the account, assessment and amount payable. The client remains responsible for supplying accurate commercial records and reviewing the declaration before submission.
Calculate several returns separately
The published penalty table gives the rates and starting rules, but it does not provide a worked allocation for one error that touches several VAT returns with different due dates. That multi-period calculation is unsettled in the public schedule. A file with that shape needs a return-by-return calculation instead of one blended month count. Do not present the blended figure as an official formula when the source does not show one.
Our recommendation is to calculate each affected return separately and reconcile the totals to the ledger. The reason is visible: the 1% period begins from the relevant return, refund application or assessment date, so different starting dates can produce different penalty periods. Keep each period calculation beside its return and record the reviewer who approved the final sum. That file makes the judgement visible without claiming the guidance answers the open point.
Treat payment evidence as another control. Use the FTA payment reference and exact amount, then check the transaction history and match the credit to the disclosure liability. If the account still shows an unpaid balance, ask the FTA before assuming the late-payment exposure has stopped. Today, gather the Tax Difference, relevant dates, audit-notice status, payment record and private scope in one file.
Related guides
Frequently Asked Questions
For checking the current UAE penalty position.
What changed on 14 April 2026?
The FTA announced that Cabinet Decision No. 129 of 2025 entered into force on 14 April 2026 and amended the administrative-penalty schedule. The current Ministry of Finance publication reflects the revised disclosure and late-payment calculations, so older VAT penalty summaries should not be used without checking their date.
What is the current Voluntary Disclosure penalty?
The current schedule applies a monthly penalty of 1% of the Tax Difference for a Voluntary Disclosure, calculated for each month or part from the relevant date until submission. Cabinet Decision No. 129 of 2025 and the published administrative-penalty schedule are the authorities to check for the current rule.
What happens if an audit notice came first?
The current published schedule applies a fixed penalty of 15% of the Tax Difference where the taxpayer fails to submit a Voluntary Disclosure before notification of a tax audit, alongside the monthly disclosure penalty. The FTA notice and current Cabinet Decision publication should be checked against the file.
Can Exiloz check an old penalty calculation?
Exiloz can compare the affected return, submission date, payment record and penalty calculation with the current FTA and Ministry of Finance publications. The Federal Tax Authority remains the authority on the amount due, the effect of an audit notice and the correction required in EmaraTax.
Is Your Penalty Current?
Exiloz checks your dates, Tax Difference and payment record against the current UAE Voluntary Disclosure penalty schedule.