Key takeaways
- The UAE penalty for paying VAT late is 14% per annum, charged monthly on the unpaid VAT for each month or part of a month, starting the day after the due date (rule in force since 14 April 2026).
- A VAT payment that is one day late is charged as a full month, because the Federal Tax Authority (FTA) penalty table says "for each month or part thereof".
- The late payment penalty does not replace the VAT itself: the unpaid VAT stays due, and the penalty keeps accruing on whatever remains unsettled.
- Cabinet Decision No. 129 of 2025 replaced the earlier late payment structure with the 14% per annum monthly charge, and the penalty table shows no cap on it.
- A company can ask the FTA for a penalty waiver or an instalment plan through EmaraTax, but instalment plans only cover penalties of at least AED 50,000 in total and only once the tax itself is paid.
What is the penalty for paying UAE VAT late?
The penalty is a monthly charge at 14% per annum on the VAT you haven't paid, applied for each month or part of a month from the day after the due date. It sits in Table 1, Item 9 of Cabinet Decision No. 40 of 2017 on administrative penalties, as amended by Cabinet Decision No. 129 of 2025.
The wording in the official text is: "A monthly penalty of (14%) per annum, for each month or part thereof, imposed on the unsettled Payable Tax amount from the day following the due date of payment and on the same date monthly thereafter." The same text states that penalties don't remove the duty to pay the tax itself.
14% per annum: the monthly penalty on unsettled VAT for each month or part of a month, from the day after the due date. Source: Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 129 of 2025, Table 1, Item 9, checked 07 November 2026.
| Item | What the official text says | Status as of 07 November 2026 |
|---|---|---|
| Rate | 14% per annum, imposed monthly | In force since 14 April 2026 |
| Unit of charge | Each month or part thereof | Applies from the day after the due date |
| Base | Unsettled payable tax | Falls as you pay |
| Repeat date | Same date each month; first day of the next month if the date doesn't exist | Footnote to the penalty table |
| Cap | None stated for this item | Checked in the consolidated text |
How is the UAE VAT late payment penalty calculated?
Take the unpaid VAT, apply the 14% annual rate, and charge it once for each month or part of a month the tax stays unsettled. The official text gives the rate and the timing but no worked formula, so the monthly arithmetic below is our reading, not an FTA example.
Say a SHAMS trading company owes AED 100,000 of VAT and pays it five weeks after the due date. If the 14% annual rate is divided evenly across twelve months (about 1.17% a month), the first charge arrives the day after the due date and the second on the same date a month later. That's two charges of roughly AED 1,167, or about AED 2,333 in total. The company would also still owe the AED 100,000 itself.
If you want a figure for a real liability, confirm the calculation against the balance shown in EmaraTax before paying, because the FTA applies the charge to the amount unsettled on each charging date.
When does a UAE VAT payment count as late?
A VAT payment counts as late once the due date has passed without the full amount settled. The FTA's guidance on u.ae says returns are generally due within 28 days after the tax period ends, and that businesses with annual turnover below AED 150 million file quarterly while those at AED 150 million or more file monthly.
| Business | Default tax period | Return due |
|---|---|---|
| Annual turnover below AED 150 million | Quarterly | Generally within 28 days after the period ends |
| Annual turnover of AED 150 million or more | Monthly | Generally within 28 days after the period ends |
| Certain business types | As assigned by the FTA | As shown in EmaraTax |
The page on u.ae doesn't give a separate payment deadline, so use the due date EmaraTax shows against each return. If you'd rather not track these dates by hand, the free UAE compliance calendar lists them for your company.
For tax that becomes payable through a voluntary disclosure or an FTA tax assessment, the penalty table gives 20 business days (from submission of the disclosure, or from receipt of the assessment) as the relevant due date.
Did the VAT penalty rules change in 2026, and what about older unpaid VAT?
Yes. Cabinet Decision No. 129 of 2025 took effect on 14 April 2026 and amended Tables 1 and 3 of Cabinet Decision No. 40 of 2017; the late payment charge is now 14% per annum, imposed monthly.
What the decision doesn't tell you is how to treat VAT that fell due before 14 April 2026 and is still unpaid. The consolidated text we checked has no transitional wording on that point, and we couldn't find FTA guidance that settles it. So if you carry an old VAT balance, treat the split between the period before and after 14 April 2026 as unconfirmed: ask the FTA through your EmaraTax profile or take advice on your facts, and keep the original assessment or return records.
Can you get a VAT late payment penalty waived, reduced or paid in instalments?
You can apply, but nothing is automatic. The FTA offers three routes: a penalty waiver request, a penalty instalment plan, and a reconsideration request, all through EmaraTax and all free of charge.
| Route | Who it suits | Key conditions (FTA pages) | FTA response time |
|---|---|---|---|
| Penalty waiver | A company with a penalty it believes shouldn't stand | Criteria sit in Article 4 of Cabinet Decision No. 105 of 2021; the applicant undertakes not to repeat the violation | Up to 110 business days from a complete application |
| Instalment plan | A company that can't pay a large penalty at once | Unsettled penalties only; no payable tax outstanding for the period; penalties total at least AED 50,000; not under dispute | Up to 110 business days from a complete application |
| Reconsideration | A company that disputes the FTA's decision | Raised within 40 business days of the original decision; extension possible under FTA Decision No. 1 of 2025 | Up to 45 business days, extendable |
If reconsideration doesn't resolve it, the decision can be taken to the Tax Dispute Resolution Committee at the Department of Justice.
What most guides don't tell you
One day late is charged as a full month. The phrase "each month or part thereof" means a payment made the morning after the deadline can attract the same charge as one made on the last day of the month. If you can't pay in full, paying before the next monthly charging date matters more than paying on a convenient day.
Partial payments reduce the base. The penalty is imposed on the "unsettled" amount, so paying part of the VAT before the next charging date should lower the next charge on the remaining balance. This is reasoned from the wording rather than stated in an FTA example, so keep the payment receipts.
An instalment plan covers penalties, not the VAT. The FTA requires that no tax is payable for the period before it will consider instalments, so you pay the VAT first and spread only the penalty. The AED 50,000 minimum also rules out most small penalties.
The reconsideration clock is short. Forty business days from the date of the FTA's decision is not long when a notice sits unread in an inbox. A missed deadline needs an extension request, which isn't guaranteed.
Which VAT deadlines apply to your company?
Your due dates depend on your tax period, your registration date and any assigned period from the FTA, so a generic date won't always match your return. The free UAE compliance calendar from Qawi is a free calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Frequently asked questions
What happens if I file my VAT return late? A late return carries its own fixed penalty, separate from the late payment charge, so a company that files late and pays late can face both. The current fixed amount sits in Table 1 of Cabinet Decision No. 40 of 2017 as amended; we haven't repeated a figure here because published commentary on the April 2026 changes is inconsistent.
When is the VAT return deadline in the UAE? Returns are generally due within 28 days after the end of the tax period, according to u.ae. Businesses with annual turnover below AED 150 million file quarterly, and those at AED 150 million or more file monthly, unless the FTA assigns a different period.
How do I file a VAT return on EmaraTax? You file VAT returns electronically through the FTA's EmaraTax portal, and FTA services require a UAE Pass login. Open the VAT return for the period, complete the boxes, submit, and pay any VAT due by the deadline.
How often do I need to file VAT returns in the UAE? Most businesses file quarterly, because the monthly period applies to businesses with annual turnover of AED 150 million or more. The FTA can assign a different tax period to certain business types, so check the period shown in your EmaraTax profile.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Cabinet Decision No. 40 of 2017 and its amendments, consolidated text incl. Cabinet Decision No. 129 of 2025 (Federal Tax Authority)
- Cabinet Decision No. 129 of 2025 and amendments to Cabinet Decision No. 40 of 2017 (Ministry of Finance)
- Penalty waiver and instalment plan requests (Federal Tax Authority)
- Reconsideration request (Federal Tax Authority)
- File VAT returns (u.ae)
Last checked: 07 November 2026
This is general information, not tax or legal advice for your specific situation.