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UAE Excise Tax Fundamentals/Calculating and Filing Excise Tax Returns
9 min

Payments, Penalties and Voluntary Disclosure

Learn how to pay excise tax, what penalties apply for non-compliance, and how voluntary disclosure works.

Payments, Penalties and Voluntary Disclosure

Paying excise tax on time and avoiding penalties is critical. The FTA imposes significant administrative penalties for non-compliance, but there are mechanisms to correct mistakes proactively.

How to pay excise tax

Excise tax can be paid through:

  1. FTA e-services portal — Online payment via credit card or bank transfer
  2. Bank transfer — Direct transfer to the FTA's designated bank account using your TRN as reference
  3. Exchange houses — Through designated exchange houses (if available)

Payment must be received by the FTA by the return due date (28th of the following month). Late payments trigger penalties.

Administrative penalties

Cabinet Decision No. 52 of 2017 establishes penalties for various excise tax violations:

Late registration penalty

  • AED 10,000 for failure to register on time

Late filing penalty

  • Fixed penalty of AED 1,000 for the first occurrence
  • AED 2,000 for repeated occurrence within 24 months
  • Plus 4% per day on outstanding tax (up to 300% of the tax amount)

Late payment penalty

  • 2% of the unpaid tax immediately
  • 4% on the 7th day
  • 1% daily penalty (up to 300% of the tax amount)

Failure to maintain records

  • AED 10,000 for the first violation
  • AED 20,000 for repeated violations within 24 months

Failure to issue excise tax invoices

  • AED 15,000

Other violations

  • Various penalties for failure to provide information, submit documents, or comply with FTA directives

Voluntary disclosure

The FTA provides a voluntary disclosure mechanism that allows businesses to correct errors proactively and benefit from reduced penalties.

When to use voluntary disclosure:

  • You discover an error in a previously filed return
  • You underpaid excise tax
  • You failed to register on time
  • You made incorrect declarations

How voluntary disclosure works:

  1. File a voluntary disclosure through the FTA portal
  2. Pay the additional tax due
  3. Reduced penalties apply compared to if the FTA discovers the error during an audit

Benefits of voluntary disclosure:

  • Significantly reduced penalties
  • Demonstrates good faith compliance
  • Reduces the risk of audit-triggered penalties
  • Builds a compliance history with the FTA

Redress and dispute resolution

If you disagree with an FTA assessment or penalty:

  1. Request reconsideration — Submit a reconsideration request to the FTA within 20 business days
  2. Tax Disputes Resolution Committee (TDRC) — If the FTA rejects the reconsideration, you can appeal to the TDRC
  3. Federal courts — As a final resort, you can appeal to the federal courts

Draft note: Penalty amounts and voluntary disclosure procedures may be updated by Cabinet decisions and FTA guidance. Always verify the current penalty schedule and consult a qualified UAE tax professional for your specific situation.

Practical UAE example

**Scenario: A late filing and voluntary disclosure** Noura runs a carbonated drinks import company. In May, she realizes she forgot to file her excise return for April. **The penalty situation:** - Late filing penalty: AED 1,000 (first occurrence) - If she had tax to pay, daily late payment penalties would also apply **What Noura should do:** 1. File the April return immediately through the FTA portal 2. Pay the excise tax due plus the AED 1,000 late filing penalty 3. Ensure future returns are filed on time to avoid the higher AED 2,000 repeated-offense penalty **Alternative scenario — voluntary disclosure:** If Noura had filed the April return but understated her tax by AED 5,000, she could file a voluntary disclosure: 1. She files a voluntary disclosure through the FTA portal 2. She pays the additional AED 5,000 tax 3. Reduced penalties apply because she came forward voluntarily 4. If the FTA had discovered the error during an audit, the penalties would have been much higher Voluntary disclosure is always preferable to waiting for the FTA to discover the error.

Key takeaways

  • Excise tax must be paid by the 28th of the month following the tax period.
  • Late filing penalties start at AED 1,000 and escalate for repeated violations.
  • Late payment penalties can reach up to 300% of the unpaid tax amount.
  • Voluntary disclosure allows businesses to correct errors proactively with reduced penalties.
  • Disputes can be resolved through reconsideration, the TDRC, and ultimately the federal courts.

Authoritative sources

Cabinet Decision No. 52 of 2017 on Administrative Penalties for Excise Tax

UAE Cabinet · Cabinet Decision No. 52 of 2017

View source

Federal Decree-Law No. 7 of 2017 on Excise Tax

United Arab Emirates — Federal Government · Federal Decree-Law No. 7 of 2017

View source

FTA Excise Tax Guides and Public Clarifications

Federal Tax Authority (FTA) · FTA Excise Tax Guides (EXTP1, EXTP2, EXTP3 series)

View source
Knowledge check

1. What is the fixed penalty for late filing of an excise tax return for the first time?

2. What is the main benefit of filing a voluntary disclosure when you discover an error in a past return?

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This lesson is general educational content, not individualized tax or legal advice. Always consult a qualified professional for your specific situation.