UAE Cabinet Overhauls Tax Penalty Regime Under Decision No. 129

The United Arab Emirates cabinet approved Cabinet Decision No. 129 of 2025, revising the administrative tax penalty framework that governs VAT, excise and corporate taxes. The amendment reduces several penalties, replaces the compounding late‑payment surcharge with a flat 14 % annualised rate calculated monthly, and lowers penalties for voluntary disclosures. The decision updates references to Federal Decree‑Law No. 28 of 2022 and aligns the penalty structure with the corporate tax regime introduced in 2023.

The new rules take effect on 14 April 2026, giving businesses a deadline to review compliance processes. The changes are described as the most consequential update since the introduction of corporate tax, aiming to encourage proactive correction of tax errors while maintaining consistency across tax types.