CT Penalties & Compliance
Penalty Categories
1. Late Filing
- First offence: AED 500
- Second offence: AED 1,000
- Repeated: increasing amounts
2. Late Payment
- 2% of unpaid tax on the day after deadline
- 4% after 7 days
- 1% daily penalty (up to 300% of tax due)
3. Record-Keeping Violations
- AED 10,000 for failure to maintain records
- AED 5,000 for each repeated violation
4. Failure to Register
- AED 10,000 for failure to register by deadline
5. Tax Evasion
- Criminal penalties including imprisonment
- Fines up to 300% of the tax due
Voluntary Disclosure
A taxpayer may submit a voluntary disclosure if they discover an error. This can reduce penalties:
- If submitted before an FTA audit is initiated: penalty reduction
- If submitted after an audit is initiated: full penalties apply
Reconciliation Process
The FTA may offer a reconciliation process for certain penalties. This involves:
- FTA issues a penalty notice
- Taxpayer submits a reconciliation request
- FTA reviews and may reduce the penalty
Best Practice
- File on time, even if you cannot pay
- Maintain proper records
- Submit voluntary disclosures promptly
- Seek professional advice for complex issues