What are Cabinet Decision 49 of 2021 penalties?
Cabinet Decision 49 of 2021 penalties are the revised administrative fines the UAE Federal Tax Authority (FTA) applies for violations of tax laws. The decision amended the earlier penalty regime under Cabinet Decision 40 of 2017. It reduced several fixed fines, capped daily penalties, and introduced redemption rules for unpaid tax. The new rates took effect on June 28, 2021.
This guide breaks down each penalty category, the exact amounts, and how the FTA calculates them. It covers Value Added Tax (VAT), excise tax, and general tax procedure violations. For the wider compliance picture, see our FTA Compliance UAE hub.
Why Cabinet Decision 49 of 2021 matters
Before this decision, many UAE businesses faced steep fines that grew quickly through daily charges. The 2021 reform softened the impact for taxpayers who voluntarily corrected errors. It also gave a 70% reduction on legacy unpaid penalties that met the redemption conditions.
The decision sits under Federal Decree-Law 7 of 2017 on tax procedures, later updated by Federal Decree-Law 28 of 2022. It works alongside Federal Decree-Law 8 of 2017 (VAT) and Federal Decree-Law 7 of 2017 (excise tax). For a broader view of fines across all tax categories, read our guide to UAE tax penalties.
Who Cabinet Decision 49 applies to
The decision applies to every person registered or required to be registered for VAT or excise tax in the UAE. This includes mainland companies, free zone entities, and individuals carrying on a taxable business. It also applies to tax agents and legal representatives acting on behalf of registered persons.
Full penalty schedule under Cabinet Decision 49 of 2021
The table below lists the main administrative fines. Amounts are taken directly from the decision text published by the Ministry of Finance (MoF).
General tax procedure penalties
| Violation | Penalty |
|---|---|
| Failure to keep required records | AED 10,000 first time, AED 20,000 on repeat |
| Failure to submit data in Arabic when requested | AED 5,000 |
| Failure to notify the FTA of changes to tax records | AED 5,000 first time, AED 10,000 on repeat |
| Failure of legal representative to inform the FTA of their appointment | AED 10,000 |
| Failure of legal representative to file a tax return on time | AED 1,000 first time, AED 2,000 on repeat within 24 months |
| Failure to facilitate the work of a tax auditor | AED 20,000 |
VAT specific penalties
| Violation | Penalty |
|---|---|
| Late VAT registration | AED 10,000 |
| Late VAT deregistration | AED 1,000 per month, capped at AED 10,000 |
| Failure to issue a tax invoice or alternative document | AED 2,500 per missing document |
| Failure to issue a tax credit note | AED 2,500 per missing document |
| Failure to follow conditions for electronic invoices and credit notes | AED 2,500 per incorrect document |
| Displaying prices without VAT included | AED 5,000 |
| Failure to notify the FTA of charging tax based on margin | AED 2,500 |
Late filing and late payment penalties
| Violation | Penalty structure |
|---|---|
| Late submission of a tax return | AED 1,000 first time, AED 2,000 on repeat within 24 months |
| Late payment of tax due on a return | 2% of unpaid tax immediately, then 4% monthly from the 1st day after the due date, capped at 300% |
| Voluntary disclosure of an error | 5%, 10%, 20%, 30%, or 40% of the tax difference based on timing |
| Tax assessment by the FTA after audit | 50% of the unpaid amount, plus 4% per month of delay |
For deeper detail on filing fines across the system, see our breakdown of late filing penalties UAE.
How late payment penalties work in practice
The late payment rule under Cabinet Decision 49 of 2021 changed the start date for the monthly fine. Under the old rules, the daily and monthly penalties began the day after the return due date. The amended rule resets the monthly clock to one calendar month after the due date, which gives taxpayers more breathing room.
Worked example: late VAT payment
A company owes AED 100,000 in VAT for the quarter ending March 31, 2025. The return and payment are due by April 28, 2025. The company pays on July 15, 2025, which is 78 days late.
- Immediate 2% fine on April 29: AED 2,000
- 4% monthly fine starting one month after the due date
- Two full monthly periods elapse before payment
- Monthly fines: AED 100,000 x 4% x 2 = AED 8,000
- Total penalty: AED 10,000 on top of the AED 100,000 tax
The cap is 300% of the unpaid tax. So even after years of delay, the fine cannot exceed AED 300,000 in this example. More details on registration related fines sit in our late registration penalties UAE guide.
Voluntary disclosure penalties
If a taxpayer finds an error in a past return, they can file a voluntary disclosure using Form 211. The penalty depends on how quickly they act after the original due date.
| Timing of voluntary disclosure | Penalty on the tax difference |
|---|---|
| Before FTA notification of audit, within 1 year | 5% |
| Within 2 years | 10% |
| Within 3 years | 20% |
| Within 4 years | 30% |
| More than 4 years after the due date | 40% |
There is also a fixed AED 1,000 fine the first time a voluntary disclosure is filed, rising to AED 2,000 for repeats within 24 months. Filing a voluntary disclosure before the FTA opens an audit is almost always cheaper than waiting.
Excise tax penalties under the same decision
Cabinet Decision 49 of 2021 also covers excise tax violations. Excise tax applies to tobacco, sugary drinks, energy drinks, and electronic smoking devices.
Key excise penalties
- Failure to register for excise tax: AED 10,000
- Failure to display excise tax in prices: AED 5,000
- Failure to comply with stockpiler conditions: AED 20,000
- Failure to provide price lists to the FTA: AED 5,000 first time, AED 10,000 on repeat
The 2021 redemption rule for legacy penalties
Cabinet Decision 49 of 2021 introduced a one time redemption mechanism. If a taxpayer had unpaid administrative penalties imposed before June 28, 2021, they could pay only 30% of the total. The other 70% was waived, provided the conditions were met.
Redemption conditions
- The administrative penalty was imposed under the old Cabinet Decision 40 of 2017.
- The penalty remained unpaid in full as of June 28, 2021.
- The taxpayer settled all due tax up to December 31, 2021.
- The taxpayer paid 30% of the unpaid administrative penalty by December 31, 2021.
The original deadline was extended once. Taxpayers who missed it now owe the full original penalty.
How Cabinet Decision 49 interacts with newer rules
The UAE tax framework has expanded since 2021. Corporate tax came into force under Federal Decree-Law 47 of 2022, with its own separate penalty schedule under Cabinet Decision 75 of 2023. E-invoicing penalties sit under Cabinet Decision 106 of 2025, ranging from AED 2,500 to AED 50,000 per violation.
Cabinet Decision 49 of 2021 continues to govern VAT and excise tax fines. It does not directly apply to corporate tax or e-invoicing, but the general procedural fines under it overlap with all tax types administered by the FTA. Compare the regimes through our pages on UAE VAT penalties, UAE corporate tax penalties, and UAE e invoicing penalties.
How to avoid Cabinet Decision 49 of 2021 penalties
Most fines under this decision come from missed deadlines, poor record keeping, or incorrect invoices. A short checklist helps reduce risk.
Practical compliance checklist
- File VAT returns within 28 days of the tax period end.
- Pay VAT due in full by the same deadline.
- Keep tax records for at least 5 years, or 15 years for real estate.
- Issue tax invoices within 14 days of the date of supply.
- Display all prices VAT inclusive in the UAE market.
- Update the FTA portal within 20 business days of any change to business details.
- Notify the FTA when deregistration conditions are met within 20 business days.
- Use voluntary disclosures to fix past errors before an audit notice arrives.
Where to read the official text
The decision is published in the Official Gazette and summarised by the Ministry of Finance. The FTA also issues public clarifications that interpret specific clauses. Always cross check the latest version, as the UAE has amended the underlying tax procedures law since 2021.
For ongoing updates and related guides, return to our FTA Compliance UAE hub.
Get help staying compliant
Cabinet Decision 49 of 2021 penalties grow quickly when filings slip. EInvoice Direct gives UAE businesses the structured invoice data, audit trail, and tax records the FTA expects, with an accredited service provider (ASP) included at no extra charge. To see plans and pricing for your business, get UAE e-invoicing pricing.
Questions, answered
What is Cabinet Decision 49 of 2021?
Cabinet Decision 49 of 2021 is the UAE law that revised administrative penalties for tax violations. It amended the earlier Cabinet Decision 40 of 2017 and took effect on June 28, 2021. The decision lowered several fixed fines, changed how late payment penalties are calculated, and added a redemption rule that let taxpayers settle old unpaid fines at 30% of the original amount.
How much is the late VAT payment penalty in the UAE?
The late VAT payment penalty is 2% of the unpaid tax applied immediately after the due date. A further 4% monthly penalty starts one calendar month after the due date and continues each month until the tax is paid. The total late payment penalty is capped at 300% of the unpaid tax amount.
What is the penalty for late VAT registration in the UAE?
Late VAT registration carries a fixed administrative penalty of AED 10,000 under Cabinet Decision 49 of 2021. A business must register for VAT once its taxable supplies and imports in the last 12 months exceed AED 375,000, or are expected to exceed that threshold in the next 30 days. The fine applies from the date registration was due.
What is a voluntary disclosure penalty?
A voluntary disclosure penalty is the fine applied when a taxpayer corrects an error in a past return. The rate depends on timing: 5% within one year of the due date, 10% within two years, 20% within three years, 30% within four years, and 40% after that. A fixed AED 1,000 fine also applies for the first disclosure.
Does Cabinet Decision 49 of 2021 cover corporate tax?
No. Cabinet Decision 49 of 2021 covers VAT, excise tax, and general tax procedure violations. Corporate tax penalties are set out in Cabinet Decision 75 of 2023, issued after corporate tax came into force under Federal Decree-Law 47 of 2022. Some procedural fines, such as failing to keep records, overlap across all tax types administered by the FTA.
Is the 70% penalty waiver still available?
No. The 70% waiver under Cabinet Decision 49 of 2021 was a one time redemption mechanism. To qualify, taxpayers had to settle all due tax and pay 30% of unpaid administrative penalties by December 31, 2021. The deadline was extended once but has now closed. Taxpayers who missed it owe the full original penalty amount.
How long must I keep tax records in the UAE?
UAE tax law requires businesses to keep records for at least 5 years from the end of the tax period they relate to. For real estate, the retention period is 15 years. Failure to keep records carries a penalty of AED 10,000 for the first offence and AED 20,000 for a repeat. Records must be available in Arabic when the FTA requests them.
Keep reading
The complete UAE tax penalties matrix for VAT, corporate tax, and e-invoicing
UAE tax penalties across VAT, corporate tax, and e-invoicing in one place, with amounts, legal sources, and relief options. See the full matrix below.
Read the guide →UAE VATVAT penalties in the UAE: the complete reference list
VAT penalties UAE explained: late registration, filing, payment fines and voluntary disclosure rules under Cabinet Decision 49 of 2021.
Read the guide →FTA Compliance UAEA plain-English guide to UAE corporate tax penalties
UAE corporate tax penalties explained in plain English, with fines, filing deadlines, and how to avoid them. Read the full breakdown and stay
Read the guide →This content is informational and does not constitute tax, legal, or financial advice. Consult an FTA-registered tax agent or a licensed UAE audit firm before acting on this information.
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