Get instant, accurate penalty estimates based on the official FTA administrative penalty schedule. Input your VAT amount and days late — get your exact penalty in seconds. Used by 500+ UAE businesses.
Based on official FTA Federal Decree-Law No. 13 of 2016 and Cabinet Decision No. 49 of 2021 administrative penalty schedule.
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| Period | Days Late | Late Filing | Late Payment | Total Penalty | % of VAT |
|---|
Understanding how the Federal Tax Authority (FTA) calculates and applies VAT penalties is critical for every UAE business. Penalties under the UAE VAT law are governed by Cabinet Decision No. 49 of 2021 on Administrative Penalties for Violations of Tax Laws. Here is everything you need to know.
When a VAT return is not submitted to the FTA by the deadline (usually the 28th of the month following the tax period), a fixed administrative penalty applies regardless of whether any VAT is owed:
A flat penalty of AED 1,000 is imposed for a first-time late VAT return filing. This applies even if you had zero VAT to pay. The clock starts the day after the filing deadline.
If you commit the same violation (late filing) within 24 months of the first offense, the penalty doubles to AED 2,000. Any further repeat offenses within 24 months continue at AED 2,000. The 24-month window resets after a clean period.
Late payment penalties are calculated as a percentage of the unpaid VAT amount and accumulate over time in three distinct tiers:
As soon as your VAT payment is one day overdue, the FTA immediately imposes a 2% penalty on the total outstanding VAT amount. This is a one-time charge applied at the point of first default. Example: AED 50,000 unpaid VAT → AED 1,000 immediate penalty.
If the VAT remains unpaid after 7 days from the due date, an additional 4% monthly penalty is charged on the outstanding amount. This is a further one-time charge. After this point, the cumulative penalty stands at 6% of the original unpaid VAT. Example: AED 50,000 → additional AED 2,000 (total so far: AED 3,000).
After the first month from the payment due date, a daily penalty of 1% of the outstanding unpaid tax is charged for every day the amount remains unpaid. This compounds rapidly. The total late payment penalty is capped at 300% of the original unpaid VAT. At 1% per day, this cap is reached after approximately 294 additional days (beyond the first month).
| Violation | Penalty (First Offense) | Penalty (Repeat <24 months) |
|---|---|---|
| Late VAT return filing | AED 1,000 | AED 2,000 |
| Late VAT payment — Day 1 | 2% of unpaid VAT | Same rate applies |
| Late VAT payment — After 7 days | Additional 4% of unpaid VAT | Same rate applies |
| Late VAT payment — Daily (after 1 month) | 1% per day (capped at 300%) | Same rate applies |
| Failure to register for VAT | AED 20,000 | AED 20,000 |
| Failure to issue a tax invoice | AED 5,000 per invoice | AED 5,000 per invoice |
| Incorrect VAT return (voluntary disclosure) | 5% of unpaid tax (min AED 3,000) | Escalating rates apply |
| Incorrect VAT return (FTA-discovered) | 50% of unpaid tax | Up to 300% in repeated cases |
| Failure to maintain required records | AED 10,000 | AED 50,000 |
| Late de-registration from VAT | AED 10,000 | AED 10,000 |
To illustrate the real cost of delay, here is a comparison based on AED 50,000 unpaid VAT with first-offense filing status:
Note: These comparisons assume AED 50,000 VAT due. The 300% cap means the maximum late payment penalty is AED 150,000 on AED 50,000 principal — regardless of how many more days pass. Filing fees are fixed and do not accumulate beyond the first/second offense amounts.
Avoid future VAT penalties with our professional VAT return filing services — we handle preparation, submission, and FTA correspondence on your behalf. Businesses with corporate tax obligations should also use our corporate tax filing UAE service. If you have received an FTA audit notice, contact our tax advisory team immediately.
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