Why strong accounting processes matter more than ever in the UAE
Businesses that maintain year-round discipline drive growth
As companies adapt to the UAE’s corporate tax (CT) regime, operational and compliance challenges continue to surface, particularly for SMEs and start-ups. Limited resources, lack of specialised expertise, and competing financial priorities often complicate their efforts to stay compliant. In this environment, building a robust accounting and auditing system is not just about meeting regulatory obligations; it is also essential for driving financial efficiency and long-term growth.
“The introduction of corporate tax has significantly elevated the role of accounting and auditing for the UAE businesses. With the government now effectively a stakeholder in corporate profits through a 9 per cent tax, companies must ensure every transaction is accurately recorded, compliant with the new tax laws and decrees,” says Elie Karaky, Managing Director, EK Finance.
According to Karaky, the stakes are high. “Stronger internal controls, timely reconciliations, and continuous monitoring have become essential to avoid compliance risks.”
Inaccurate accounting or misclassification of transactions under the new tax regime can result in financial penalties and even reputational fallout. “Violations such as filing inaccurate corporate tax returns can attract administrative penalties, interest charges, and in some cases, legal action,” he adds.
To meet these new standards, businesses need more than just compliance, they need robust accounting systems that actively support growth and efficiency. This includes structured processes, tech integration, and strategic financial planning across the fiscal year.
Compliance starts with structure
Filing corporate tax returns in the UAE demands a foundational shift in how financial data is recorded and reported.
“Filing a CT return in the UAE involves maintaining financial records as per International Financial Reporting Standards (IFRS)or IFRS for SMEs, registering with the Federal Tax Authority (FTA) for a Tax Registration Number (TRN), calculating taxable income with relevant adjustments, submitting the return via the EmaraTax portal, and paying any tax due on time,” explains Sumayya Zain, CEO, Hallmark International Auditors.
She points out that despite the clarity of the process, common mistakes persist.
“Common errors include missing deadlines for registration and filing, miscalculating taxable income or expenses, inaccurate record-keeping, failing to make appropriate elections, or disclosing required details in schedules such as realisation basis schedules and insufficient documentation for related-party transactions,” Zain points out, adding, “Using expert advice and reliable accounting systems helps businesses avoid these issues.”
A year-round exercise
A key takeaway from financial experts is that corporate tax can no longer be treated as a once-a-year event.
Priju Dominic, CEO & Founder of Dominic & Partners, emphasises the need for proactive planning. “Smart companies are integrating taxation into monthly cash flow planning. The key lies in proactive forecasting, tax provisioning, and aligning payment cycles with revenue flows.” This means embedding tax planning into the core of business operations, such as tracking liabilities, forecasting tax obligations, and adjusting financial strategies in real-time.
Gopu Rama Naidu, Managing Partner at KGRN Chartered Accountants, echoes this with a broader compliance strategy. “This includes maintaining accurate financials, regularly adjusting for taxable income, and applying available reliefs such as small business relief, group loss transfers, and free zone exemptions. Mid-year estimates and periodic reviews help identify risks early and support informed decision-making.”
Aligning the financial year
Getting the basics right, such as selecting the appropriate tax period, can significantly streamline compliance.
Mostafa Elrefaey, CEO of Integrity Accounting Services, says alignment between financial year-end and the tax authority’s deadlines is essential. “This alignment helps reduce the risk of late filings and penalties, while also allowing for more efficient tax planning.”
Zain adds that “to align with UAE corporate tax requirements, businesses should select their tax period during registration with the FTA, based on documents like the Articles of Association or a board resolution.”
She also notes that natural persons must follow the Gregorian calendar year. In cases where changes are required, such as tax grouping or claiming foreign tax relief, approval must be secured from the FTA with a justified commercial reason.
Understanding updates
As corporate taxation continues to evolve, staying updated on recent policy changes is non-negotiable. In 2025, several businesses will need to determine if they qualify as a Qualifying Free Zone Person or are eligible for small business relief.
“Understanding whether they conduct qualifying activities, ensuring proper expense deductibility, and applying correct revenue recognition practices will be crucial to optimise their tax position and maintain compliance,” says Karaky from EK Finance.
Cross-border structuring
The UAE is also taking steps to support businesses engaged in international trade and investment through policy tools such as the Double Taxation Avoidance Agreement (DTAA). These agreements play a critical role in protecting cross-border profits from being taxed twice and can significantly enhance a company’s global competitiveness.
“For UAE-based companies with international income, the DTAA isn’t just a treaty — it’s a strategic tool,” says Dominic. “It protects profits from being eroded by double taxation and opens the door to competitive cross-border structuring. But unlocking its full benefit requires more than eligibility. It demands proper documentation, timely residency certification, and informed tax planning.”
Transfer pricing: getting it right
One area where compliance intersects heavily with technical accounting is Transfer Pricing (TP), particularly for businesses with related-party transactions. The UAE has adopted the OECD’s three-tier TP framework: Master File, Local File, and Country-by-Country Report (CbCR).
“The Master and Local Files are required for entities with revenue of Dh200 million or more, or part of a multinational group with global revenue exceeding Dh3.15 billion,” explains Naidu. “A disclosure form must also be submitted if related-party transactions exceed Dh40 million in total or Dh4 million per category.”
Naidu outlines what a compliant TP file entails: “A compliant TP file includes intercompany agreements, a functional analysis, a justified transfer pricing method, for example the Transactional Net Margin Method (TNMM), and the Comparable Uncontrolled Price (CUP), and benchmarking using tools like TP Catalyst, Orbis, or RoyaltyRange. It must also demonstrate economic substance and pass the benefit test.”
For Kinnari Rahul Doshi, Managing Partner at N R Doshi & Partners, the significance of TP goes beyond formalities. “Think of transfer pricing not just as rules, but as the mechanism ensuring related party transactions genuinely reflect the value each entity contributes, safeguarding against profit erosion under the UAE’s corporate tax system. It’s about demonstrating economic substance.”
Cash flow and liquidity
Tax obligations in the UAE are strict, with no leeway in payment deadlines. That’s why proactive financial planning is essential to avoid any cash flow strain and ensure timely compliance with the FTA’s requirements.
“In the UAE, corporate tax payments must be made in full within nine months after the tax period ends, with no deferral or instalment options available,” says Vijaya Mohan, Managing Partner at Evas Constantin.
“To effectively manage the cash flow impact of corporate tax in the UAE, it’s crucial to adopt a disciplined financial model. Set aside provisions for tax payments quarterly and establish dedicated reserve accounts, implement detailed cash flow forecasting and integrate tax obligations into your financial planning,” Mohan suggests.
Compliance as a strategic advantage
The broader message from advisors is clear: tax compliance isn’t just a legal requirement, it’s part of a business’ strategic fabric.
“In today’s regulated environment, tax non-compliance isn’t just a financial risk — it’s a business risk,” says Dominic, adding, “Compliance isn’t a checkbox, it’s a strategic safeguard.” ■
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