What is the late payment penalty rate for tax?

Article 8 – Publication This Decision shall be published in the Official Gazette. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 4 Table No. 1 On Violations and Administrative Penalties related to the Implementation of Tax Procedures Law2 No. Description of Violation Administrative Penalty in AED 1 Failure of the Person conducting Business or who has an obligation under the Tax Procedures Law or the Tax Law to keep the required records and other information specified in the Tax Procedures Law and the Tax Law. One of the following two penalties shall be imposed: 1. 10,000 for each violation. 2. 20,000 in each case of repeated violation within 24 months from the date of the last violation. 2 Failure of the Person conducting 5,000 Business or who has an obligation under the Tax Procedures Law or the Tax Law to submit the data, records, and documents related to tax in Arabic to the Authority when requested. 3 Failure of the Taxable Person to submit a 10,000 registration application within the timeframe specified in the Tax Law. 4 Failure of the Registrant to submit a 1,000 in case of late submission of the deregistration application within the application and on the same date timeframe specified in the Tax Law.3 monthly, up to a maximum of 10,000. 5 Failure of the Registrant to inform the Authority of any case that may require the amendment of the information pertaining to his tax record kept by Authority. One of the following two penalties shall be imposed: 1. 1,000 for each violation. 2. 5,000 in each case of repeated violation within 24 months from the date of the last violation. 2 Table amended as per Cabinet Decision No. 129 of 2025 (effective from 14 April 2026). 3 In accordance with Cabinet Decision No. 49 of 2021, if any penalty is to be imposed on the same date monthly, the date for a month that does not contain a corresponding date shall be considered as the first day of the following month. The penalty for all other months shall be imposed on the date the monthly penalty was first imposed. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 5 6 Failure of the Legal Representative of the 1,000 Taxable Person to provide Notification of their appointment within the specified timeframes, in which case the Penalties will be due from the Legal Representative’s own funds. 7 Failure of the Legal Representative for 1,000 for the first time. the Taxable Person to file a Tax Return 2,000 in case of repetition within 24 within the specified timeframes, in which months. case the Penalties will be due from the Legal Representative’s own funds. 8 Failure of the Registrant to submit the 1,000 for the first time. Tax Return within the timeframe 2,000 in case of repetition within 24 specified in the Tax Law. months. 9 Failure of the Taxable Person to settle 1. A monthly penalty of (14%) per the Payable Tax within the timeframe annum, for each month or part 4 specified in the Tax Law. thereof, imposed on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter. 2. For the purposes of this penalty, the due date of payment in the case of the Voluntary Disclosure and Tax Assessment, shall be as follows: a. 20 business days from the date of submission, in the case of a Voluntary Disclosure. b. 20 business days from the date of receipt, in the case of a Tax Assessment. 4 In accordance with Cabinet Decision No. 49 of 2021, if any penalty is to be imposed on the same date monthly, the date for a month that does not contain a corresponding date shall be considered as the first day of the following month. The penalty for all other months shall be imposed on the date the monthly penalty was first imposed. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 6 10 The Registrant submits an incorrect Tax 500, unless the Registrant takes one of Return. the following actions: 1. Corrects his Tax Return within the deadline specified for submitting the Tax Return pursuant to the Tax Law. 2. Submits a Voluntary Disclosure to correct the Tax Return without resulting in a difference in the amount of Due Tax. 11 The submission of a Voluntary Disclosure by the Taxable Person or the Taxpayer on errors in the Tax Return, Tax Assessment or tax refund application pursuant to Clauses 1 and 2 of Article 10 of the Tax Procedures Law. A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be applied as of the date following the due date of the Tax Return, or submission of the relevant tax refund application until the date of the Voluntary Disclosure is submitted. 12 Failure of the Taxable Person or the Taxpayer to submit a Voluntary Disclosure in relation to errors in the Tax Return, Tax Assessment, or tax refund application before being notified by the Authority that it will be subject to a Tax Audit. The two following penalties shall be imposed: 1. A fixed penalty of 15% on the Tax Difference. 2. A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be calculated as follows: a. Where the Taxable Person submits a Voluntary Disclosure after being notified that it will be subject to a Tax Audit by the Authority, the penalty shall be imposed for the period from the day following the due date of the Tax Return, or the submission of the relevant tax refund application until the date of submitting the Voluntary Disclosure. b. Where the Taxable Person fails to submit a Voluntary Disclosure, the Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 7 penalty shall be imposed as of the date following the due date of the Tax Return, or the submission of the relevant tax refund application until the date of issuance of the Tax Assessment. 13 Failure of the Person subject to Tax 20,000 Audit, his Tax Agent, or Legal Representative to offer facilitation to the Tax Auditor in violation of the provisions of Article 20 of the Tax Procedures Law, provided that the penalties in this case will be due from the Person’s, his Legal Representative’s, or Tax Agent’s own funds, as applicable. 14 Failure of the Registrant to calculate tax 1. A monthly penalty of 14% per annum, on behalf of another Person where the for each month or part thereof, Registrant Taxable Person is obliged to imposed on the unsettled amount of 5 do so under the Tax Law. Payable Tax, from the day following the due date of payment and on the same date monthly thereafter. 2. For the purposes of this penalty, the due date of payment in the case of the Voluntary Disclosure and Tax Assessment, shall be as follows: a. 20 business days from the date of submission, in the case of a Voluntary Disclosure. b. 20 business days from the date of receipt, in the case of a Tax Assessment. 5 In accordance with Cabinet Decision No. 49 of 2021, if any penalty is to be imposed on the same date monthly, the date for a month that does not contain a corresponding date shall be considered as the first day of the following month. The penalty for all other months shall be imposed on the date the monthly penalty was first imposed. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 8 15 The failure of the Person to calculate any 50% of the unpaid or undeclared Tax. tax that may be due on the import of goods as per the Tax Law. Table No. 2 On Violations and Administrative Penalties related to the Implementation of Federal Decree-Law No. 7 of 2017 on Excise Tax6 No. Description of Violation Administrative Penalty in AED 1 Failure of the Taxable Person to display 5,000 prices inclusive of Tax. 2 Failure to comply with the conditions and procedures of transferring Excise Goods from a Designated Zone to another Designated Zone, and the mechanism of preserving, storing, and processing such Excise Goods. 3 Failure of the Taxable Person to provide 5,000 for the first time. the Authority with the price lists of the 10,000 in case of repetition. Excise Good that it produces, imports or sells. The penalty shall be the higher of 50,000 or 50% of the Tax, if applicable, chargeable on the goods in relation to the violation. Table No. 3 On Violations and Administrative Penalties related to the Implementation of Value Added Tax Law7 No. Description of Violation Administrative Penalty in AED 1 Failure of the Taxable Person to display 5,000 prices inclusive of Tax. 2 Failure of the Taxable Person to notify 2,500 the Authority of applying tax based on 6 Table amended as per Cabinet Decision No. 49 of 2021. 7 Table amended as per Cabinet Decision No. 129 of 2025 (effective from 14 April 2026). Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 9 Margin. 3 Failure to comply with the required conditions and procedures related to keeping the Goods in a Designated Zone or moving them to another Designated Zone. 4 Failure of the Taxable Person to issue a 2,500 for each detected case. Tax Invoice or the alternative document when making any supply within the period legally specified. 5 Failure of the Taxable Person to issue a 2,500 for each detected case. Tax Credit Note or the alternative document within the period legally specified. 6 Failure of the Taxable Person to comply 2,500 for each detected case. with the conditions and procedures regarding the issuance of a Tax Invoice and a Tax Credit Note electronically. The penalty shall be the higher of 50,000 or 50% of the Tax, if applicable, chargeable on the goods in relation to the violation. Cabinet Decision No. 40 of 2017 and its amendments – As published by the Ministry of Finance 10

Article 4 – Publication and Entry into Force This Decision shall be published in the Official Gazette and shall come into effect on 1 August 2023. Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 3 Table of Violations and Administrative Penalties Annexed to Cabinet Decision No. 75 of 2023 on Violations Related to the Application of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses No. Description of Violation Administrative Penalty Amount in AED 1. Failure of the Person conducting a Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to keep the required records and other information specified in the Tax Procedures Law and the Corporate Tax Law. Failure of the Person conducting Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to submit the data, records and documents related to Tax in Arabic to the Authority when requested. Failure of the Registrant to submit a deregistration application within the timeframe specified in the Corporate Tax Law and its implementing decisions. Failure of the Registrant to inform the Authority of any case that may require the amendment of the information pertaining to his Tax record kept by the Authority. One of the following penalties shall apply: 1. 10,000 for each violation. 2. 20,000 in each case of repeated violation within 24 months from the date of the last violation. 2. 3. 4. 5. 6. 5,000 1,000 in case of late submission of the application and on the same date monthly, up to a maximum of 10,000. One of the following penalties shall apply: 1. 1,000 for each violation. 2. 5,000 in each case of repeated violation within 24 months from the date of the last violation. Failure of the Legal Representative to provide 1,000 notification of their appointment within the specified timeframes, in which case the penalties will be due from the Legal Representative's own funds. Failure of the Legal Representative to file a Tax 1. 500 for each month, or part thereof, Return within the specified timeframes, in for the first twelve months. Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 4 7. 8. 9. which case the penalties will be due from the 2. 1,000 for each month, or part thereof, Legal Representative's own funds. from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the Tax Return must be submitted, and on the same date monthly thereafter. Failure of the Registrant to submit a Tax Return 1. 500 for each month, or part thereof, within the timeframe specified in the for the first twelve months. Corporate Tax Law. 2. 1,000 for each month, or part thereof, from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the Tax Return must be submitted, and on the same date monthly thereafter. Failure of the Taxable Person to settle the 1. A monthly penalty of 14% per annum, Payable Tax. for each month or part thereof, on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter. 2. For the purposes of this penalty, the due date of payment in the case of the Voluntary Disclosure and Tax Assessment, shall be as follows: a. 20 Business Days from the date of submission, in the case of a Voluntary Disclosure. b. 20 Business Days from the date of receipt, in the case of a Tax Assessment. The Registrant submits an incorrect Tax 500, unless the Person corrects his Tax Return. Return before the expiry of the deadline Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 5 10. The submission of a Voluntary Disclosure by the Taxable Person in relation to errors in the Tax Return, Tax Assessment or Tax refund application pursuant to Clauses 1 and 2 of Article 10 of the Tax Procedures Law. 11. Failure of the Taxable Person to submit a Voluntary Disclosure in relation to errors in the Tax Return, Tax Assessment or Tax refund application pursuant to Clauses 1 and 2 of Article 10 of the Tax Procedures Law, before being notified by the Authority that it will be subject to a Tax Audit. for the submission of the Tax Return according to the Corporate Tax Law. A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be applied as of the date following the due date of the relevant Tax Return, the submission of the Tax refund application, or the Notification of the Tax Assessment and until the date the Voluntary Disclosure is submitted. The following penalties shall apply: 1. A fixed penalty of 15% on the Tax Difference. 2. A monthly penalty of 1% on the Tax Difference, for each month or part thereof, to be applied as follows: a. Where the Taxable Person submits a Voluntary Disclosure after being notified that it will be subject to a Tax Audit by the Authority, the penalty shall be imposed for the period from the day following the due date of the relevant Tax Return, or the submission of the Tax refund application or Notification of the Tax Assessment and until the date the Voluntary Disclosure is submitted. b. Where the Taxable Person fails to submit a Voluntary Disclosure, the penalty shall be imposed as of the date following the due date of the relevant Tax Return, or the submission of the Tax refund application or Notification of the Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 6 12. 13. 14. Tax Assessment and until the date of issuance of the Tax Assessment. Failure of a Person subject to Tax Audit, his Tax 20,000 Agent or Legal Representative to offer facilitation to the Tax Auditor in violation of the provisions of Article 20 of the Tax Procedures Law, in which case the penalties will be due from the Person’s, Legal Representative’s or Tax Agent’s own funds, as applicable. Failure of a Person to submit, or late 1. 500 for each month, or part thereof, submission of a Declaration to the Authority, for the first twelve months. as required in accordance with the provisions 2. 1,000 for each month, or part thereof, of the Corporate Tax Law. from the thirteenth month onwards. This penalty shall be imposed from the day following the expiry date of the timeframe within which the Declaration must be submitted, and on the same date monthly thereafter. Failure of the Taxable Person to submit a Tax 10,000 Registration application within the timeframe specified by the Authority in accordance with the Corporate Tax Law. 1 1 Added as per Cabinet Decision No. 10 of 2024 Cabinet Decision No. 75 of 2023 and its amendments – As published by Ministry of Finance 7