The UAE tax system is young and many businesses filed their first VAT and Corporate Tax returns with gaps — missing reverse charge, incorrect free zone treatment, non-deductible costs claimed, late registrations. Since 14 April 2026 the penalty regime rewards those who correct early and is heavier on errors the FTA finds itself.
The 2026 penalty rules in brief
| Situation | Penalty |
|---|---|
| Late payment of tax | 14% a year on the unpaid amount, calculated monthly |
| Voluntary disclosure (you correct it) | 1% per month on the difference, from the original due date |
| Error found by the FTA | 15% fixed + 1% per month on the difference |
| Incorrect return corrected before the due date | Reduced or no penalty |
Source: Cabinet Decision No. 129 of 2025. Other administrative penalties (registration, records, e-invoicing) apply separately.
Our tax health check
- Review of your VAT returns, Corporate Tax registration and return, and records.
- A clear list of issues, the tax at stake and the penalty if left vs if disclosed.
- Corrections and voluntary disclosures prepared and filed.
- Requests for penalty waiver or reconsideration where there are grounds.
- Your full compliance calendar loaded into SJPR BiX, so it does not happen again.
Frequently asked questions
Is it worth making a voluntary disclosure?
Usually yes. Under the 2026 rules a disclosure costs 1% per month on the difference, while an error found by the FTA costs a 15% fixed penalty plus the monthly charge.
Can FTA penalties be waived?
In some cases — for example when there are valid reasons or the penalty was applied in error — a waiver or reconsideration request can be made. We assess your grounds and prepare the request.
How long does a health check take?
Typically one to three weeks depending on the number of periods and the state of the records. You see every finding in SJPR BiX.
This guide reflects UAE law and FTA guidance as at October 2026. It is general information, not advice for your specific situation — rules and thresholds change, so speak to an SJPR advisor before acting.
