FTA Penalty Reconsideration and Waiver in the UAE

There is more than one way to contest or reduce an FTA penalty, and picking the wrong one uses up time you cannot get back. The routes come from the Tax Procedures Law (Federal Decree-Law No. 28 of 2022, as amended) and Cabinet Decision No. 105 of 2021 on instalments, waivers and refunds of administrative penalties.

A tax assessment review and a reconsideration cannot run on the same assessment at the same time. Once a review has been filed, reconsideration of that assessment has to wait until the FTA decides the review or its deadline to decide passes (Article 29(3)). Once a reconsideration request has been filed, a review of that assessment can no longer be filed or continued (Article 28(5)). If a review is decided against you, you then have 40 business days from notification of that decision to request reconsideration (Article 28(4)).

Penalties arising from corporate tax decisions follow the same Tax Procedures Law route as VAT and excise penalties, because Article 29 covers any FTA decision. For wider corporate tax support, see our corporate tax services.

Most penalties are challenged by reconsideration. The legal timetable is fixed, and every stage runs from a notification date. We record those dates from the first day.

The request is free and is filed under the Reconsideration service in EmaraTax. You can attach Word, Excel, PDF, JPG, JPEG or PNG files of up to 5 MB each. The FTA’s service page says it may take up to 45 business days to respond from the date it receives a complete request. Only a formal FTA decision can be reconsidered; general enquiries, complaints and requests for clarification cannot.

The FTA does not allow tax advisers who are not registered tax agents to submit requests for other people. The request is therefore filed from your EmaraTax account by your authorised signatory, or by a registered tax agent or legal representative you appoint. We prepare the complete submission and guide whoever files it through each screen.

Missed the 40 days?

FTA Decision No. 1 of 2025, in effect since 1 March 2025, allows the FTA to accept a late reconsideration or tax assessment review request if documentary evidence shows the delay was caused by one of these:

• an accident or serious illness affecting the authorised signatory
• the death of the authorised signatory or legal representative, or of one of their first- or second-degree family members
• a temporary business disruption beyond your control
• records damaged in a disaster
• a general malfunction in the FTA’s systems
• a sudden interruption to the business or its records caused by installing a new computer system
• an FTA request for extra documents that you can show you could not obtain in time
• force majeure, at the FTA’s discretion

The same decision says the FTA will refuse an extension if you were unaware of your obligations, if a tax agent or legal representative you relied on was negligent, if the subject was complex, or if you were busy running the business. The extension request itself must set out the reasons for the delay and the grounds of the reconsideration.

Cabinet Decision No. 129 of 2025 amended the VAT, excise and Tax Procedures penalty tables in Cabinet Decision No. 40 of 2017, with effect from 14 April 2026. Checking your penalty against the correct table is often the quickest win.

Percentage-based penalties need the most careful checking. A voluntary disclosure costs 1% of the tax difference for each month or part of a month, counted from the day after the return was due until the disclosure is submitted. If no disclosure is made before the FTA gives notice of a tax audit, the penalty is a fixed 15% of the tax difference plus 1% per month. For the late-payment penalty, tax arising from a voluntary disclosure falls due 20 business days after the disclosure is submitted, and tax under an FTA tax assessment falls due 20 business days after the assessment is received. A late-payment penalty counted from an earlier date is open to challenge. If you are correcting an error rather than disputing a penalty, see our VAT voluntary disclosure service.

Corporate tax penalties sit in a separate table under Cabinet Decision No. 75 of 2023, which the April 2026 changes did not replace. For example, a late corporate tax return costs AED 500 per month for the first 12 months and AED 1,000 per month after that.

You can take the matter to the Tax Disputes Resolution Committee if the FTA rejects your reconsideration request, or if it does not decide within the legal timeframe. Each Committee is chaired by a member of the judiciary and has two expert members from the register of tax experts. The FTA lists Committees in Abu Dhabi, Dubai and Sharjah.

Three points catch businesses out. First, a court will not hear a tax dispute that has not been through the Committee. Second, if the Committee or the FTA refuses a request to extend the deadline at the objection or appeal stage, that refusal is final. Third, the payment conditions apply to the tax itself before the Committee and to part of the penalties before the court, so cash-flow planning should start as soon as a challenge looks likely.

Court proceedings are a matter for your lawyer. We prepare the tax analysis, recalculations and evidence file, and work alongside your legal counsel so the position argued at every stage is the same one set out in the reconsideration request.

Sometimes the penalty was correctly imposed, but real circumstances explain the breach. Cabinet Decision No. 105 of 2021 allows the FTA’s committee to waive penalties in whole or in part, provided the violation is not connected to tax evasion and the request is made within the period the committee sets. The request must fall within one of these cases:

• death of the registered natural person or the owner of a sole establishment, where the death directly caused the failure
• illness of that person that prevented timely compliance
• death, illness or resignation of a key employee, where this is shown to be the direct cause
• restrictions or precautionary measures imposed by UAE government authorities that directly caused the failure
• a general malfunction in FTA systems, payment gateways or telecommunication services that affected a category of persons
• a custodial sentence served by the registered person or sole owner
• tax obligations met and tax paid through the account of another registered person
• insolvency or bankruptcy, where taxes due before the declaration were settled
• any other case the committee assesses

A waiver request must include a written undertaking that the violation has been corrected and will not happen again. Only one waiver or instalment request is allowed for the same penalty. The committee decides how much to waive. The FTA states it may take up to 110 business days to respond. If the committee does not decide within 60 business days of the request being put to it, the request counts as rejected and that result is final.

Instalment plans are available only for unsettled penalties of at least AED 50,000, an amount the committee can adjust. The penalties must not be under dispute before the Committee or the courts, though a reconsideration request is allowed, and no tax may be outstanding for the period concerned. The request includes an undertaking to pay by the approved plan, and the committee may ask for a guarantee.

Corporate tax late registration penalty waiver

The AED 10,000 penalty for late corporate tax registration is cancelled automatically, or credited back if already paid, when the first tax return or annual declaration is filed within 7 months of the end of the first tax period. No reconsideration or waiver request is needed. The initiative covers the first tax period only, and the FTA has not published an end date. If you paid the penalty, the FTA adds an equivalent credit to your EmaraTax account, which you can use against other tax liabilities or ask to have refunded. For registration itself, see our corporate tax registration page.