VAT Fraud and Tax Evasion in the UAE: Penalties and Reconciliation

What counts as tax evasion?

Article 25(2) of the Federal Decree-Law No. 28 of 2022 (Tax Procedures) punishes anyone who commits tax evasion by deliberately refusing to pay any payable tax, deliberately reducing the actual value of their business or revenues, or not including associates' business, to stay below a registration limit, tax rate or threshold, deliberately levying or collecting tax without being registered, deliberately reducing the tax due, or any other act that constitutes tax evasion under the law.

The penalty is imprisonment and/or a fine of not less than the evaded tax and not more than three times that amount.

What about false documents and obstruction?

Article 25(4) punishes with imprisonment and/or a fine of up to AED 1,000,000 anyone who intentionally gives the Federal Tax Authority false information, data or documents, hides or destroys documents that must be kept and provided, steals or damages documents it holds, or prevents or impedes its employees from doing their duties.

If any of those acts causes tax evasion, or facilitates or conceals it, the heavier penalty in Article 25(2) applies. Refusing to pay an administrative fine is punishable by imprisonment and/or a fine of one to three times the fine (Article 25(3)).

Who else can be liable?

Anyone directly involved in or causing a tax crime is punished under the criminal involvement rules of the Crimes and Penalties Law (Article 25(6)). A person involved in tax evasion is also jointly liable for the tax and administrative fines (Article 25(9)). Recidivism within five years is an aggravating circumstance (Article 25(8)).

A conviction does not remove the duty to pay the tax or fines, and the court orders publication of the judgment at the convict's expense at the request of the Federal Tax Authority (Article 25(10) and (11)).

Can a tax case be settled?

Yes. Before a criminal action is instituted the Federal Tax Authority may reconcile tax evasion crimes against payment of the full tax and administrative fines. The Public Prosecution may order reconciliation after the action is instituted, and even after a conviction, against payment of the full tax and fines plus an amount equal to a percentage of the evaded tax set by the Executive Regulations (Article 27).

Reconciliation lapses the criminal proceedings, and the Public Prosecution stays execution of penalties even after a final judgment (Article 27(5)). That is the main route for a business that has discovered an error to resolve it.

What should I do first?

1. Stop and secure the records

   Do not alter or destroy anything.

2. Quantify the tax at issue

   With a tax adviser.

3. Ask about voluntary disclosure and reconciliation

   Early is better.

4. Take advice before talking to the authority

   Statements of intent matter.

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Sources

Source: Federal Decree-Law No. 28 of 2022 (Tax Procedures), official English text on the UAE Legislation portal, checked 9 October 2026. The portal lists the law as active, in force from 1 March 2023, last updated on 1 October 2025. The Arabic text prevails over translations.

This page is general information, not legal advice.