VAT penalties UAE: the amounts in force from April 2026

You ask in plain English, the AI does the bookkeeping work, and you or your accountant approve the result.

• You ask: “What could we be penalised for right now?”
• The AI agent: HelloBooks checks for open risks it can see in the books: a VAT return due soon, sales lines with no tax invoice issued within 14 days, credit notes still in draft, and bills missing attachments, and lists them with the related penalty from the table.
• You review: You or your accountant decide what to fix first. Assessing and settling penalties is between your business and the FTA.

These penalties come from Table 1 of Cabinet Decision No. 40 of 2017 as amended. Late payment is the one most businesses meet: a monthly penalty at 14% a year on the unpaid tax, for each month or part of a month. On AED 120,000 left unpaid for three months, that is roughly AED 4,200.

• Late registration application: AED 10,000
• Late deregistration application: AED 1,000, then AED 1,000 monthly, capped at AED 10,000
• Late tax return: AED 1,000 first time, AED 2,000 for a repeat within 24 months
• Late payment: monthly penalty at 14% a year on the unpaid amount
• Incorrect tax return: AED 500, unless corrected by the due date or disclosed with no tax difference

A voluntary disclosure filed before any audit notice carries a penalty of 1% of the tax difference for each month or part month until it is submitted. After an audit notice, a fixed 15% of the tax difference applies on top of the 1% monthly charge.

• Failure to keep required records: AED 10,000, AED 20,000 for a repeat within 24 months
• Failure to submit data or records in Arabic when requested: AED 5,000
• Voluntary disclosure before audit notice: 1% of the difference per month
• Voluntary disclosure after audit notice: 15% fixed plus 1% per month

Table 3 of the amended decision covers VAT. Each missing tax invoice or credit note is a separate case, so a weak invoicing process multiplies quickly: ten unissued invoices are AED 25,000.

• Failure to issue a tax invoice: AED 2,500 per detected case
• Failure to issue a tax credit note: AED 2,500 per detected case
• Failure to comply with electronic invoice and credit note rules: AED 2,500 per detected case
• Failure to display prices inclusive of tax: AED 5,000

Most penalties trace back to missing paperwork or missed dates. HelloBooks keeps the VAT due date in view, drafts invoices and credit notes the moment a sale or return is recorded, and stores every bill and receipt image against its ledger entry with an audit log. It does not file or pay anything with the FTA; it makes sure what you file is complete and on time.