Tax Compliance Checklist for UAE/Pakistan Businesses

Introduction

Tax compliance is a critical responsibility for businesses operating in the UAE and Pakistan. With evolving tax regulations, including the introduction of Corporate Tax in the UAE and ongoing updates to tax laws in Pakistan, staying compliant requires careful planning and attention to detail.

Non-compliance can result in hefty penalties, legal issues, and damage to your business reputation. That's why having a comprehensive tax compliance checklist is essential for business owners, finance teams, and tax professionals.

At ME Accounts Audit, we specialize in helping businesses across the UAE and Pakistan navigate complex tax requirements with confidence. This guide provides a detailed checklist to ensure you meet all your tax obligations on time and accurately.

Understanding the Tax Landscape

UAE Tax System

The UAE has traditionally been known for its favorable tax environment. However, recent years have seen significant changes:

Key Taxes in the UAE:

• Corporate Tax (CT): Introduced in June 2023, a 9% tax applies to taxable income exceeding AED 375,000
• Value Added Tax (VAT): 5% on most goods and services
• Excise Tax: Applies to specific goods like tobacco and sugary drinks
• Customs Duties: On imported goods

Pakistan Tax System

Pakistan has a comprehensive tax framework governed by the Federal Board of Revenue (FBR):

Key Taxes in Pakistan:

• Corporate Income Tax: Varies by business type (29% for companies, different rates for banks, etc.)
• Sales Tax (GST): 18% standard rate on goods and services
• Withholding Tax: Various rates depending on transaction type
• Provincial Taxes: Including property tax and professional tax

Tax Compliance Checklist for UAE Businesses

✅ Corporate Tax Compliance

#### 1. Determine Tax Residency Status

• Confirm whether your business is a UAE tax resident
• Understand implications for domestic vs. foreign income

#### 2. Register for Corporate Tax

• Complete registration with the Federal Tax Authority (FTA)
• Obtain your Tax Registration Number (TRN)
• Register within the specified deadline

#### 3. Maintain Proper Accounting Records

• Keep detailed financial records for at least 7 years
• Use IFRS or other acceptable accounting standards
• Ensure records are in Arabic or English

#### 4. Calculate Taxable Income

• Determine accounting net profit
• Apply necessary tax adjustments
• Claim allowable deductions and reliefs
• Calculate taxable income correctly

#### 5. File Corporate Tax Returns

• Submit returns within 9 months of financial year-end
• Ensure accuracy and completeness
• Attach required supporting documents

#### 6. Pay Corporate Tax

• Calculate tax liability accurately
• Pay within the specified deadline
• Maintain payment records

✅ VAT Compliance

#### 1. VAT Registration

• Register if taxable supplies exceed AED 375,000 annually
• Consider voluntary registration if below threshold
• Update registration details when business changes occur

#### 2. Issue Tax Invoices

• Include all mandatory information (TRN, date, description, VAT amount)
• Use proper tax invoice format
• Issue within 14 days of supply

#### 3. Maintain VAT Records

• Keep records for 5 years
• Document all taxable supplies and purchases
• Maintain import/export documentation

#### 4. File VAT Returns

• Submit returns quarterly or monthly (based on registration)
• File within 28 days of period end
• Ensure all supplies and purchases are accurately reported

#### 5. Pay VAT

• Calculate net VAT payable (output VAT minus input VAT)
• Pay within the filing deadline
• Claim refunds if applicable

#### 6. Conduct Regular Reconciliations

• Reconcile VAT returns with accounting records
• Review input VAT recoverability
• Identify and correct discrepancies

✅ Excise Tax Compliance

#### 1. Register for Excise Tax (if applicable)

• Register if you import, produce, or stockpile excise goods
• Complete registration within 30 days

#### 2. File Excise Tax Returns

• Submit returns on the 15th of each month
• Report all excise goods transactions

#### 3. Pay Excise Tax

• Calculate tax on designated goods (tobacco, energy drinks, carbonated drinks)
• Pay by the filing deadline

✅ Transfer Pricing Documentation

For businesses with related-party transactions:

#### 1. Prepare Master File

• Document global business operations and transfer pricing policies

#### 2. Prepare Local File

• Detail local entity transactions with related parties

#### 3. Maintain Disclosure Form

• Submit with corporate tax return if applicable

Tax Compliance Checklist for Pakistan Businesses

✅ Income Tax Compliance

#### 1. Obtain National Tax Number (NTN)

• Register with FBR if not already registered
• Update business information as needed

#### 2. File Income Tax Returns

• Companies: File by September 30 (for June year-end)
• Individuals/AOPs: File by September 30
• Use IRIS portal for online filing

#### 3. Pay Advance Tax

• Calculate quarterly advance tax payments
• Pay by due dates (March 15, June 15, September 15, December 15)

#### 4. Withholding Tax Obligations

• Deduct withholding tax on applicable payments (salaries, contracts, services, imports)
• File monthly withholding statements
• Deposit tax by the 15th of following month

#### 5. Maintain Tax Records

• Keep all financial records for 6 years
• Document all transactions subject to withholding tax

✅ Sales Tax (GST) Compliance

#### 1. Sales Tax Registration

• Register if annual taxable supplies exceed PKR 10 million
• Obtain Sales Tax Registration Number (STRN)

#### 2. Issue Sales Tax Invoices

• Include STRN, buyer details, tax amount
• Issue at time of supply

#### 3. File Monthly Sales Tax Returns

• Submit by the 18th of following month
• Report all taxable supplies and purchases

#### 4. Pay Sales Tax

• Calculate net sales tax payable
• Pay by the 15th of following month

#### 5. Input Tax Claims

• Ensure proper documentation for input tax credit
• Verify supplier registration status

✅ Provincial Tax Compliance

#### 1. Professional Tax

• Register and pay professional tax based on profession and location

#### 2. Property Tax

• Pay annual property tax to provincial authorities

#### 3. Punjab Sales Tax on Services

• Register if providing taxable services in Punjab
• File monthly returns

✅ Annual Audit Requirements

#### 1. Statutory Audit

• Companies must be audited annually by chartered accountants
• Submit audited financial statements with tax return

#### 2. Tax Audit

• Certain businesses may require tax audit
• Ensure compliance with FBR audit requirements

Best Practices for Tax Compliance

1. Maintain a Tax Calendar

Create a calendar with all tax deadlines, including:

• Return filing dates
• Payment due dates
• Registration renewals
• Document submission deadlines

2. Use Accounting Software

Implement cloud-based accounting systems that:

• Automate tax calculations
• Generate compliant invoices
• Facilitate easy reporting

3. Conduct Regular Internal Reviews

• Monthly reconciliations of tax accounts
• Quarterly compliance reviews
• Annual tax health checks

4. Stay Updated on Tax Law Changes

• Subscribe to FTA/FBR updates
• Attend tax seminars and webinars
• Consult with tax professionals regularly

5. Document Everything

• Keep digital and physical copies of all tax-related documents
• Maintain audit trails
• Store records securely

6. Engage Professional Tax Advisors

Working with experts like ME Accounts Audit ensures:

• Accurate tax calculations
• Timely filing and payments
• Proactive tax planning
• Representation during audits

Common Tax Compliance Mistakes to Avoid

• ❌ Missing filing deadlines
• ❌ Incorrect tax calculations
• ❌ Poor record-keeping
• ❌ Failing to register on time
• ❌ Not claiming eligible deductions
• ❌ Mixing personal and business expenses
• ❌ Ignoring withholding tax obligations
• ❌ Inadequate transfer pricing documentation

How ME Accounts Audit Can Help

At ME Accounts Audit, we provide comprehensive tax compliance services for businesses in the UAE and Pakistan:

• 📋 Tax Registration – Assistance with all tax registration requirements
• 📊 Tax Return Preparation – Accurate, timely filing of all tax returns
• 💰 Tax Planning – Strategic advice to minimize tax liability
• 🔍 Tax Audits – Representation and support during FTA/FBR audits

📱 Compliance Monitoring – Ongoing monitoring of tax obligations

• 🌍 Cross-Border Taxation – Expertise in international tax matters

Conclusion

Tax compliance doesn't have to be overwhelming. With proper planning, organized record-keeping, and professional support, you can meet all your tax obligations confidently and efficiently.

Whether you're operating in the UAE, Pakistan, or both jurisdictions, ME Accounts Audit is here to guide you through every step of the tax compliance journey.

Need help with tax compliance? Contact ME Accounts Audit today for expert tax advisory and compliance services tailored to your business needs.