26 August 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.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
Use the 2026 rates
The current figures come from the administrative penalty table published by the Ministry of Finance. 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.
The same 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 has the monthly 1% calculation. The second adds a fixed 15% on the Tax Difference and the monthly calculation. The third uses 14% per annum, charged for each month or part after the payment due date.
The table is the object that makes the claim true. Use the version that records Cabinet Decision No. 129 of 2025 and its effective date, not an undated blog summary. The FTA announcement of 15 April 2026 confirms the entry into force. If a calculator still shows the former stack, discard it and rebuild from the current table. Save the source version with the working paper.
| Event | Current rule | Starting point |
|---|---|---|
| Disclosure submitted | 1% per month or part on the Tax Difference | Relevant return, refund application or assessment date |
| 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 records
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 documents. Put the dates in one signed chronology before calculating.
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 receipt and payment reference. They are better evidence than a calendar note typed after the event.
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 that another reviewer can follow. Note the date of that decision in the chronology.
Separate tax from the penalty
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, so the tax and that disclosure penalty total AED 24,000 + AED 480 = AED 24,480. The assistance fee, if any, is a separate private charge.
That arithmetic is only the visible part. The preparer must prove why AED 24,000 is the Tax Difference, which return created it and which dates make two monthly periods. If the FTA had already notified the business of a Tax Audit before the disclosure, the fixed 15% rule would also need to be tested against the file.
The usual mistake 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 base must be visible to the person approving the submission. Keep the approval with the calculation.
Know what moves an assistance fee
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 calculation, explanation, EmaraTax preparation and follow-up. The answer should identify who owns each deliverable. It should also name the records needed from the client.
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 and condition of the records are real price drivers.
Exiloz is not an FTA-accredited e-invoicing Service Provider, is not a registered Tax Agent and does not perform statutory audits. Any assistance described here is preparation, reconciliation and submission support. The FTA remains the authority on the account, the assessment and the amount payable. The client remains responsible for supplying accurate commercial records.
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.
Our recommendation is to calculate each affected return separately and then 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. The signed reconciliation is the evidence for the final sum. Keep the period calculation beside its return. Record the reviewer who approved the sum.
Treat the payment receipt as another control, not an afterthought. The FTA says GIBAN payments need the unique reference and exact amount, and a payment can be rejected or allocated incorrectly when those details are wrong. After paying, 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. Keep the receipt with the calculation and submission reference.
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.