FTA Penalty Calculator

How FTA penalties work — and how to reduce them

The Federal Tax Authority levies two categories of financial charge: fixed administrative penalties (a set AED amount regardless of the tax at stake) and percentage-based penalties (calculated as a percentage of the unpaid or underpaid tax). Late registration and late filing carry fixed penalties; underpayment of tax and incorrect returns carry percentage penalties, which scale with the size of the error. This calculator covers the most common fixed penalties — the percentage-based ones require a full review of your returns.

Voluntary disclosure is the FTA mechanism that allows businesses to self-report errors before they are discovered in an audit. The penalty for an unintentional error discovered by the FTA is 50% of the unpaid tax. If the same error is voluntarily disclosed first, the penalty is reduced significantly — to as little as 5% if disclosed within 12 months of the due date. The financial benefit of proactive disclosure is almost always larger than the cost of the professional advice needed to file it correctly.

Reconsideration requests offer a formal route to challenge an FTA penalty decision. A business that believes a penalty was incorrectly applied has 20 working days from receipt of the penalty notice to submit a reconsideration request. If the FTA upholds the penalty, the next step is a formal objection to the Tax Disputes Resolution Committee (TDRC). Most penalty disputes are resolved at the reconsideration stage — but the request must be detailed and supported by evidence; a bare request to waive a penalty is rarely successful.

If you have received an FTA penalty notice or want to make a voluntary disclosure, our VAT team and Corporate Tax advisers handle FTA correspondence regularly and know what the reconsideration process requires.