Two things are due on the twenty-eighth day after the end of your tax period: the return and the money. They are one deadline, not two, and a return filed on time with the payment following a week later is a late payment — the FTA's position is that the funds have to have arrived, not merely been instructed.
Your period, and the stagger behind it
Most businesses file quarterly; larger ones file monthly. Which quarters you file is not your choice and is usually not calendar quarters: the FTA assigns a stagger when you register, and it fixes both your period end dates and your tax year end. The stagger matters beyond the calendar, because the tax year end is what schedules the input tax apportionment annual adjustment — that adjustment belongs in the first return after the tax year ends, not in the first return of the calendar year.
The penalty schedule, as it actually reads
Cabinet Decision No. 129 of 2025 replaced the 2021 schedule with effect from 14 April 2026. Much of what is still published online quotes the old numbers, including the 2% plus 4% late-payment penalty, so check the date on anything you read, this page included.
| Failure | From 14 April 2026 | Before (Cabinet Decision 49/2021) |
|---|---|---|
| Filing a return late | AED 1,000; AED 2,000 if repeated within 24 months | The same |
| Paying late | 14% a year on the unpaid tax, charged monthly for each month or part of a month | 2% the day after, then 4% a month, capped at 300% |
| Submitting an incorrect return | AED 500, not applied if corrected before the payment due date | AED 1,000, then 2,000 |
| Records not available in Arabic when requested | AED 5,000 | AED 20,000 |
| Not notifying the FTA of changes to your registration details | AED 1,000; AED 5,000 if repeated within 24 months | AED 5,000, then 10,000 |
| Late registration | AED 10,000 | The same |
| Late deregistration | AED 1,000 a month, up to AED 10,000 | The same |
Voluntary disclosure now costs by the month
Until April 2026 the disclosure penalty rose in yearly bands, from 5% in the first year to 40% after four. The new rule is simpler and less forgiving: 1% of the tax difference for each month since the original due date, so there is no band to wait out and every month costs the same. Since 1 April 2026 only errors with a tax effect above AED 10,000 need a disclosure at all, filed within 20 business days of finding them; smaller ones go in the next return.
If you have not disclosed by the time the FTA notifies you of an audit, the penalty becomes a fixed 15% of the tax difference plus the same 1% a month. That is far lower than the old 50% plus 4% a month, but the gap between disclosing first and being found is still the whole argument for reviewing your own returns.
Nil returns and final returns
A period with no transactions still needs a return. A nil return carries the same deadline and the same late-filing penalty as any other, and "we had nothing to report" has never been a defence. At the other end, deregistering does not end the obligation quietly either: the final return has to account for a deemed supply of the assets on hand on which you recovered input tax.
Questions people actually ask
Does filing on time but paying late still attract a penalty?
Yes. Filing and payment are separate obligations sharing one deadline. Since 14 April 2026 late payment is charged at 14% a year on the unpaid tax, calculated monthly for each month or part of a month.
Is there any advantage to disclosing an error myself?
Yes. Disclosing before an audit notice costs 1% of the tax difference per month since the original due date. After an audit notice it is 15% fixed plus the same 1% a month. On a AED 30,000 error found after eight months, that is AED 2,400 against AED 6,900.
How long do I keep the records?
At least five years from the end of the tax period for VAT records generally, and fifteen years for records relating to real estate. Since April 2026, records must be kept for two extra years while a refund application is pending.
Where these facts come from
Checked against the following on 8 October 2026. Rules and dates change — if you are reading this long after that date, verify before you act on it.
- Cabinet Decision No. 129 of 2025 on administrative penalties (DLA Piper summary)
- Federal Decree-Law No. 28 of 2022 on Tax Procedures
- Federal Tax Authority — VAT returns and payments
WisoBooks is a bookkeeping and business-management tool, not an accounting, tax or legal advisor. Nothing on this page is tax advice, and tax rules change. Confirm your own obligations with the relevant authority or a qualified advisor.
