Sound financial systems form the foundation of accurate corporate taxation in the UAE

Manali Chopra, Director of Regulatory Compliance & Tax Advisory at AKW Consultants, observes that one of the biggest challenges lies in incomplete historical records. “The absence of proper historical records and books of accounts often makes it challenging to establish accurate opening balances for the current year,” she says.

In her view, implementing strong internal controls is the most effective way to build reliable records that not only stand up to audits but also produce the correct opening balances needed for corporate tax filings.

The integration of multiple regulatory requirements remains a sticking point. Girish Chand, Senior Partner at MCA Gulf, highlights that many firms lack the ability to “seamlessly integrate VAT and corporate tax compliances” and are still unprepared for future mandates such as e-invoicing.

He also points to “inadequate IFRS compliance in the areas of lease accounting and revenue recognition, as well as limited integration with operational and HR systems.” To close these gaps, Chand recommends “a judicious mix of system upgrades, process improvements and robust compliances” aligned to each organisation’s needs.

Technology adoption is a recurring theme. Syed Asif Zaman, Managing Partner at Ahmad Alagbari Chartered Accountants and CEO of Alif Group, says that many companies rely on fragmented systems or spreadsheets, while documentation for related-party transactions is often incomplete.

“Adopting integrated accounting software, strengthening internal controls, and training staff on IFRS and corporate tax rules can close these gaps and ensure compliance,” Zaman says.

Meanwhile, small businesses face their own set of hurdles. According to Muhammed Shafeekh, CEO of Finanshels.com, the lack of proper documentation and inconsistent bookkeeping are widespread.

“These gaps lead to compliance issues, financial mismanagement, and missed opportunities for tax savings,” he explains.

Shafeekh’s firm works with SMEs to align their accounting with the UAE regulations while reducing the operational burden on company founders.

Compliance and accuracy

The introduction of corporate tax has made it clear that accounting systems can no longer be treated as secondary to business operations. Instead, they form the basis for compliance, risk management and strategic decision-making.

As Chopra puts it, “strong internal controls are essential to maintain reliable records” that withstand both audits and regulatory reviews.

Shafeekh also says that SMEs must see technology and training as investments rather than costs. “Investing in technology, internal training for staff and a robust internal control system can help streamline processes and avoid errors” he says.

However, overseeing all these can be demanding for a founder, that’s why outsourced solutions or partnerships with accounting firms, he adds, can lighten this burden without compromising compliance.

Reconciliations and internal audits

Experts agree that reconciliations and audits help create a foolproof compliance system. They serve as checkpoints that catch errors early, ensure the accuracy of financial statements, and maintain up-to-date documentation.

Chopra is clear on their importance. “Reconciliations highlight discrepancies early, allowing timely corrective action and ensuring that supporting documentation is updated and accurate. Internal audits, on the other hand, strengthen controls, detect lapses, and enhance compliance readiness.”

Chand echoes this, noting that with multiple systems in play, “continuous control and tracking in the form of periodic reconciliations, control testing and audit reviews” is necessary to meet the rigorous requirements of tax compliance.

Zaman adds a tax-specific angle, pointing out that internal audits can independently review sensitive areas such as transfer pricing compliance and deductions. “Together, they turn compliance into a continuous process, reducing FTA risk and strengthening stakeholder confidence,” he says.

For SMEs, Shafeekh explains, reconciliations and audits also provide peace of mind. “They help businesses spot discrepancies early, ensuring that financial records are accurate and up-to-date. These practices also ensure that transactions are properly classified, reducing the risk of tax penalties.”

Pre-filing reviews as a safeguard

Another layer of protection for businesses comes in the form of pre-filing reviews. These checks ensure that the data submitted in tax filings is accurate, consistent, and fully compliant with regulations.

“Pre-filing reviews are critical to confirm accurate disclosures, address mismatches, and ensure overall compliance, thereby mitigating exposure to penalties or reputational risks,” says Chopra.

These are now considered mandatory disciplines. “Non-compliance has a cost in the form of penalties and fines. This mandates pre-filing reviews and checks to ensure that the filings are done accurately on a consistent basis,” says Chand.

For SMEs, Shafeekh highlights the preventive role of such reviews: “They minimise errors, avoid penalties, and ensure compliance with the latest regulations. A thorough pre-filing review can uncover potential issues and help address them before submission.” ■