Internal Controls in the UAE: Under the New Corporate Tax Regime

The United Arab Emirates (UAE) has undergone a significant fiscal transformation with the implementation of its first federal corporate tax regime. With this change, businesses operating in the UAE face not only new tax rates and compliance obligations but also a heightened need for effective internal controls, robust documentation, and a governance framework aligned with the expectations of the Federal Tax Authority (FTA) and other regulatory bodies.

For years, the UAE stood out as a business-friendly heaven, attracting global entrepreneurs with its 0% corporate tax policy and streamlined regulatory environment. Above all, as global tax standards evolve, the UAE is making strategic changes to remain competitive, compliant, and credible in the international arena.

For many organizations, internal controls have historically been associated with financial monitoring, auditing, and internal checks. But under the new corporate tax regime, internal controls in the UAE have been considered a strategic dimension. They have become the weapon through which risks related to taxes are managed, governance is empowered, and operational resilience is improved. Therefore, leveraging internal control systems in the UAE is no longer an option. It is a priority.

UAE Corporate Tax Regime 

The UAE’s Corporate Tax Law introduced a broader tax base, registration requirements for taxable persons, clear filing deadlines, and documentation obligations. Accordingly, the tax rate structure and compliance burden mark a departure from the near zero-tax environment historically associated with the UAE. 

According to PwC, this shift represents a “profound change for companies operating in the UAE”. For example, taxable persons whose taxable income exceeds AED 375,000 are subject to a 9% corporate tax rate. Businesses must now register, file tax returns, maintain accurate records and adhere to compliance guidelines issued by the FTA. 

Why do Internal Controls in the UAE become a Priority?

The introduction of the tax regime has increased pressure on boards, audit committees, and the C-level executives. Therefore, ensuring that internal control systems are fit for the purpose. Internal controls in the UAE serve as the mechanism to:

• Assure accurate and complete reporting of taxable income and adjustments
  
• Mitigate tax and compliance risk through preventive and detective controls
  
• Demonstrate audit trails, documentation standards and evidence readiness
  
• Embed governance disciplines across financial, operational and tax-related functions
  

Altogether, internal controls are now a strategic governance issue, not simply a finance or tax department concern.

Why Choose autoResilience Internal Controls in the UAE?

1. Documented Evidence & Audit Readiness
   
   Enterprises are expected to maintain documentation that supports their tax filings under the corporate tax regime. The tax law emphasizes on record-keeping and evidence tracking.
   autoResilience Internal controls in the UAE ensures that reliable documentation is maintained, audit trails and key decision-making records are preserved. This facilitates compliance and reducing the risk of penalty.
   
2. Tax Risk Management & Control Environment
   
   A strong control environment is essential. Without it, enterprises face the risk of misreporting, adjustment errors or failing to meet deadlines. Internal controls mitigate such risks by creating checks and enhancing the visibility and traceability of the control environment.
   
3. Governance Frameworks & Operational Risk
   
   Internal controls in the UAE are not only about taxation. Because they’re tied to operational risk and governance frameworks. Controls around data capture, transaction processing, subsidiary oversight, internal audit and risk monitoring align with broader governance expectations. This integration makes internal controls a lever for strategic resilience.
   
4. Stakeholder Trust
   
   AutoResilience internal controls contribute significantly to stakeholder confidence, from investors, regulators and business partners. Firms that embed strong control systems can operate more efficiently, respond to regulatory queries more robustly and thereby converting compliance into a competitive advantage.

Key Features of an Effective Internal Control in the UAE

To meet the demands of the new corporate tax regime, enterprises should build their internal control systems around these key features:

A) Governance and Oversight

• Board and senior management should be the owners of the internal control framework. Clear delegation of responsibility for internal controls, tax compliance and documentation.
  
• Audit committee or risk committee should regularly review control effectiveness, control deficiencies and remediation status.
  
• Policies and procedures mapping tax-related processes (registration, return filing, documentation) and internal controls should be approved and communicated.

B) Risk Assessment & Control Design

• Identification of tax and compliance risks: e.g., incorrect taxable income calculations, missing documentation, delayed filings, free zone status misapplication.
  
• Design of control activities: preventive (policy enforcement, automated reconciliations), detective (post-filing review, internal audit), corrective (remediation tracking).
  
• Use of risk-control matrix linking risks to controls, responsibilities, evidence and monitoring.

C) Documentation & Data Integrity

• Standardised record-keeping procedures aligned with FTA expectations (e.g., supporting schedules, accounting adjustments, audit trail).
  
• Data integrity controls across systems, accuracy of source data, change controls, versioning, access controls.
  
• Retention schedules: ensure documents are retained for the statutory period and accessible in case of audit.

D) Monitoring, Reporting & Continuous Improvement

• Establish KPI and KRI frameworks for internal controls: e.g., number of late filings, number of documentation exceptions, number of adjustments post-audit and control testing results.
  
• Periodic internal audits focused on tax-compliance controls and control environment.
  
• Control deficiencies should trigger root-cause analysis and remediation plans.
  
• Use dashboards for senior management oversight of internal control posture.

E) Systems, Automation & Integration

• Deploy technology solutions to automate controls: e.g., data reconciliation tools, workflow approvals, notifications for deadlines, audit trail logging.
  
• Integrate internal control workflows with accounting, tax and enterprise risk management systems.
  
• Ensure that control logs and evidence are stored securely, accessible and structured for audit.
  
• Train staff on internal control systems, governance expectations and tax compliance requirements.

Conclusion

The UAE’s corporate tax regime marks a structural shift in the country’s business environment. As businesses adjust to the new tax regime, the role of internal controls UAE becomes far more than a compliance tick-box: it is a strategic imperative for governance. A robust internal control framework supports accurate reporting, mitigates tax and operational risk, demonstrates governance maturity, and becomes a source of competitive advantage.

For C-level executives and leaders, the message is quite clear: update your internal control systems now! Connect internal controls to governance, invest in automating your processes, embed monitoring, and consider internal controls as a key pillar of your strategic operating model in the UAE. The time to ace in the race is now.

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