Cabinet Decision 129 of 2025: Did UAE Corporate Tax Penalties Change?

Because CD 129 arrived with headlines about a "new UAE penalty regime," many summaries state or imply that corporate tax penalties changed on 14 April 2026. They did not. The corporate tax penalty table — AED 10,000 for late registration, AED 500 per month rising to AED 1,000 for late filing, 14% per annum on late payment, AED 10,000/20,000 for record-keeping failures full penalty list → — is the same table that has applied since Cabinet Decision No. 75 of 2023 took effect on 1 August 2023, as amended by Cabinet Decision No. 10 of 2024.

What changed is the other side of the tax system. VAT and Excise penalties previously ran on an older, compounding model with penalty rates that could stack severely. CD 129 replaced that with the structure corporate tax already used.

Late payment: a flat 14% per annum for VAT and Excise. The old compounding structure is replaced by a 14% annual rate applied monthly on unpaid tax — matching the corporate tax approach.

Voluntary disclosures: time-based, audit-sensitive. Before an FTA audit notification, a voluntary disclosure carries a penalty of 1% per month on the tax difference, running from the original due date until the disclosure is filed. After audit notification, a fixed 15% of the tax difference applies on top of the monthly 1%. This replaced the old stepped bands of 5%–40% (and up to 50% post-notification) that applied to VAT and Excise — and it mirrors the corporate tax rules that already worked this way voluntary disclosure guide →.

Several fixed penalties reduced. Examples under the new VAT/Excise framework: failure to update records in Arabic reduced from AED 20,000 to AED 5,000; failure to notify changes at AED 1,000 for a first breach and AED 5,000 on repeat; incorrect return at AED 500 first, AED 2,000 repeated, waivable where corrected in time or where a disclosure shows no tax difference.

First violation versus repeat violation. Many penalties now distinguish a first breach from a repeat within 24 months — lighter first-time penalties, heavier repeats. Corporate tax record-keeping penalties have used this 24-month repeat logic since 2023.

One coherent system. Most UAE businesses are registered for both VAT and corporate tax. Until April 2026 they operated under two different penalty philosophies; now the logic is the same on both sides: late payment costs 14% per annum, self-correcting early costs 1% per month, and waiting for the FTA to find the error adds 15%. Risk decisions — whether and when to disclose — can now be made once, on one framework.

The procedural code is unified too. Federal Decree-Law No. 28 of 2022 on Tax Procedures, as amended by Federal Decree-Law No. 17 of 2025, is the shared procedural spine for corporate tax, VAT and Excise — audits, assessments, disclosures, limitation periods, and a five-year window from the end of a tax period to claim refunds or credits. Businesses reconciling historic positions should treat that five-year limit as a hard deadline.

The incentive structure is deliberate. Across every tax, the framework now rewards the same behaviour: find your own errors before the FTA does. A disclosure filed before an audit notice on a AED 100,000 tax difference avoids a AED 15,000 fixed surcharge outright — the monthly 1% is the only charge. The favourable window closes permanently the day an audit notification arrives.

Tax difference of AED 50,000, discovered 8 months after the original due date, no audit notification received. Voluntary disclosure penalty: 1% × 8 months × 50,000 = AED 4,000.

The same error found by the FTA in an audit: 15% fixed (AED 7,500) plus the accrued monthly 1% — more than triple the cost, before late payment charges on the underlying tax.

1. If you carry any historic VAT or Excise exposure, re-price it under the new rules — the economics of disclosing may have improved substantially.

2. If you assumed corporate tax penalties changed in April 2026, re-anchor on Cabinet Decision No. 75 of 2023 — the figures on our penalty list are current corporate tax penalties →.

3. Treat the pre-audit disclosure window as the asset it is, on every tax voluntary disclosure →.

4. Understand what an audit actually involves before one arrives — notice periods, document requests and dispute deadlines FTA tax audit process →.