UAE imposes reduction on VAT, excise tax penalties

The UAE has reduced tax penalties for value-added tax (VAT) and Excise Tax in order to help the companies and individuals better cope with the impact of the Covid-19 pandemic.

According to the newly-released Cabinet Decision No. 49 of 2021, taxpayers who currently have penalties pending can see those reduced to 30%, provided they settle them before December 31, 2021.

Going forward, late payment penalties will be reduced to four percent per month, a substantial reduction from one percent per day while an overall cap stays at 300 percent.