Pakistan tax guides, calculators and advisory resources
Practical, source-linked guides on Pakistan income tax, salary and sales tax calculators, FBR filing, withholding rate cards, business compliance and cross-border work — written against the enacted Finance Act 2026.
Quick answer: Financial statements and the bookkeeping behind them are the basis of the corporate tax return. Bank statements support that record; they do not replace it. Records must be retained for the statutory period.
Corporate tax did something to UAE bookkeeping that nothing before it managed: it made the accounting standard a legal question rather than a preference. Your taxable income is computed from your financial statements, and the law now specifies which standards those statements must follow, when you may use the cash basis, when an audit is compulsory, and how long everything must be kept.
Books that were adequate for a bank or a licence renewal are not automatically adequate for a return. This guide sets out exactly what is required, by size, with the decisions it comes from.
The one-line version.IFRS is the default. Revenue at or below AED 50 million may elect IFRS for SMEs. Revenue at or below AED 3 million may use the cash basis. An audit is compulsory above AED 50 million and for every Qualifying Free Zone Person. Records are kept seven years.
Which standard applies to you
Article 20 of the Corporate Tax Law requires taxable income to be determined from adequate, standalone financial statements prepared under accounting standards accepted in the UAE. Ministerial Decision No. 114 of 2023 says what those are — and the list is short.
Which standard applies to you
Revenue in the tax period
Accounting standard
Basis
Audit
Up to AED 3,000,000
IFRS for SMEs may be elected
Accrual, or cash basis permitted
Not required by the tax law
AED 3,000,001 – 50,000,000
IFRS for SMEs may be elected
Accrual
Not required by the tax law
Above AED 50,000,000
Full IFRS
Accrual
Required
Any Qualifying Free Zone Person
IFRS, or IFRS for SMEs if eligible
Accrual
Required, regardless of revenue
Tax group
Consolidated statements aggregating members, eliminating transactions between them
Accrual
Required where the group exceeds AED 50m
Two points that carry penalties. IFRS for SMEs is an election available to those who qualify, not a default — if you are above AED 50 million you must use full IFRS, and using the wrong framework is treated as a violation rather than a presentational preference. And the audit requirement for a Qualifying Free Zone Person has no revenue floor: a free zone company turning over AED 400,000 and claiming 0 per cent needs audited statements just as much as one turning over AED 400 million.
The cash basis, and its trap
A taxable person with revenue not exceeding AED 3 million may prepare financial statements on the cash basis rather than accrual — recognising income when it is received and expenses when they are paid. Beyond that threshold it is available only in exceptional circumstances on application to the FTA.
It is genuinely simpler for a small services business. But it changes what your revenue figure is, and that matters more than it first appears, because the same revenue figure decides eligibility for Small Business Relief. If you use the cash basis, revenue for the AED 3 million relief test is measured on the cash basis too — you cannot compute one number on cash and the other on accrual to fit under both thresholds.
Where the cash basis quietly costs you. A consultancy invoices AED 2.9 million in December and is paid in February. On the cash basis that revenue lands in the following period, which can look helpful — until the following period is the one that breaches AED 3 million and permanently forfeits Small Business Relief. Decide the basis on how the business actually runs, then model both thresholds against it, rather than choosing the basis to chase a threshold.
WHICH OBLIGATIONS ONE COMPANY ACTUALLY HAS - worked
Cedar Logistics FZ-LLC. Free zone, claiming Qualifying Free
Zone Person status. Revenue for the year to 31 Dec 2026:
Qualifying income - logistics in a Designated Zone AED 4,200,000
Non-qualifying - one mainland client ............. AED 180,000
---------------------------------------------------------------
TOTAL REVENUE .................................... AED 4,380,000
THE DE MINIMIS TEST
Non-qualifying revenue ........................... AED 180,000
5% of total revenue .............................. AED 219,000
The AED 5,000,000 alternative limit .............. AED 5,000,000
Lower of the two limits .......................... AED 219,000
---------------------------------------------------------------
RESULT: 180,000 is under 219,000 - DE MINIMIS MET
Below roughly AED 100,000,000 of revenue the 5 per cent test
always binds and the AED 5,000,000 headline never applies.
Cedar has AED 39,000 of headroom, not AED 4,820,000.
WHAT THAT MEANS FOR THE BOOKS
Accrual accounting under IFRS ............... REQUIRED
Audited financial statements ................ REQUIRED
Cash basis (revenue under AED 3,000,000) .... NOT AVAILABLE
Record retention, Article 56 ................ 7 years
The audit is the line most often missed. Ministerial Decision
No. 84 of 2025 makes audited statements mandatory for EVERY
Qualifying Free Zone Person for periods commencing on or after
1 January 2025, with NO revenue floor. Cedar cannot use the
small-company cash basis and cannot skip the audit, and both
follow from the QFZP claim rather than from its size.
ONE MORE MAINLAND INVOICE: another AED 40,000 of non-qualifying
revenue takes Cedar to AED 220,000 against a AED 219,050 limit.
Breaching it costs QFZP status for that period AND the four
following periods - five years of 9 per cent because of one
invoice worth AED 40,000.
When an audit is compulsory
When an audit is compulsory
You are
Audited financial statements?
Source
Revenue above AED 50 million
Yes
Ministerial Decision No. 82 of 2023
A Qualifying Free Zone Person
Yes, at any revenue
MD 82 of 2023, reinforced by MD 84 of 2025 for periods from 1 Jan 2025
Revenue below AED 50 million, not a QFZP
Not required by the corporate tax law
—
That last row comes with a caveat worth stating plainly: your free zone or licensing authority may require an audit anyway for licence renewal, and many do. The corporate tax law setting no requirement is not the same as nobody requiring one.
What to keep, and for how long
Article 56 requires records supporting the return to be kept for seven years from the end of the tax period they relate to. The obligation applies to businesses that pay nothing — a company under Small Business Relief and an exempt person both have to hold the evidence supporting their position.
THE RECORD SET THE FTA EXPECTS — keep 7 years
FINANCIAL STATEMENTS
[ ] Balance sheet, income statement, changes in equity,
cash flow, notes — for every tax period
[ ] Audit report, where an audit is required
[ ] Trial balance and general ledger behind the statements
THE TAX COMPUTATION ITSELF
[ ] Reconciliation from accounting profit to taxable income
[ ] Support for EVERY add-back and deduction
[ ] Election records — Small Business Relief, IFRS for SMEs,
cash basis, tax group
TRANSACTIONS
[ ] Sales invoices and customer contracts
[ ] Purchase invoices and supplier contracts
[ ] Bank statements for every account, complete
[ ] Payroll records and WPS files
[ ] Fixed asset register with additions and disposals
[ ] Inventory records and year-end counts
RELATED PARTIES (the file most often missing)
[ ] Schedule of all related-party transactions
[ ] Arm's length support — comparables, pricing basis
[ ] Intercompany agreements, signed and dated
[ ] Management and head office recharge basis
FREE ZONE — ADDITIONAL
[ ] Revenue analysed as qualifying vs non-qualifying
[ ] De minimis calculation per period
[ ] Substance evidence — staff, premises, expenditure
Books not yet on an IFRS footing?
Chartered Advisory sets up a UAE-compliant chart of accounts, keeps the ledgers to the standard your revenue requires, and prepares the statements the corporate tax return is built from.
The monthly routine that makes the return a formality
Most corporate tax pain is created during the year and discovered in month nine. A disciplined close removes almost all of it.
MONTHLY CLOSE — UAE taxable person
WITHIN 10 DAYS OF MONTH END
[ ] Every bank and card account reconciled to the ledger
[ ] Sales invoices raised and recorded, sequence unbroken
[ ] Purchase invoices captured with supplier TRN, so input
VAT is recoverable
[ ] Payroll posted, WPS transfer evidenced
[ ] Accruals and prepayments adjusted
[ ] Fixed asset additions capitalised, depreciation posted
TAX-SPECIFIC, MONTHLY
[ ] Disallowables coded as they arise, not at year end:
entertainment, fines, non-business expenditure,
owner personal costs
[ ] Related-party transactions tagged
[ ] Free zone only: revenue tagged qualifying / non-qualifying
and de minimis headroom recalculated
QUARTERLY
[ ] VAT return prepared and filed within 28 days
[ ] Management accounts reviewed against budget
[ ] Related-party pricing sense-checked
AT YEAR END
[ ] Statements prepared under the correct standard
[ ] Audit, if required
[ ] Accounting profit to taxable income reconciliation
[ ] Return filed within 9 months, payment with it
The mistakes that cost the most
Using management accounts as the tax base. The return is built from statements under IFRS or IFRS for SMEs, not from a spreadsheet.
Electing IFRS for SMEs above AED 50 million. It is not available there, and using it is a violation.
Choosing the cash basis to dodge a threshold without modelling its effect on Small Business Relief eligibility.
Assuming a small free zone company needs no audit. Every QFZP does.
Coding disallowables only at year end, when nothing can be restructured.
Keeping no related-party file. It is the first thing asked for and the most common gap.
Discarding records after five years on the VAT retention habit. Corporate tax is seven.
Confirm before you rely on this. The accounting requirements sit in Article 20 of Federal Decree-Law No. 47 of 2022 with Ministerial Decisions No. 114 and No. 82 of 2023, and free zone authorities impose their own audit conditions. Check the current position with the Federal Tax Authority and your licensing authority. Chartered Advisory prepares and supports; a licensed UAE professional signs where the law requires it.
Sources
This guide is written against the official and clearly labelled professional references below. Rates, thresholds and portal procedures change between reviews, so open the primary source before relying on a figure.
Which accounting standard does UAE corporate tax require?
IFRS by default. A taxable person with revenue not exceeding AED 50 million in the tax period may elect IFRS for SMEs instead, which is simpler on disclosure, financial instruments and goodwill. Above AED 50 million, full IFRS is compulsory. Accounts prepared under neither framework are treated as a violation rather than a presentational choice.
Can I keep my books on a cash basis?
Only if revenue does not exceed AED 3 million in the tax period, or in exceptional circumstances on application to the FTA. It is genuinely simpler for a small services business, but it changes your revenue figure — and because the same figure decides Small Business Relief eligibility, that basis must be used consistently for both rather than picked to fit each threshold.
Does a small company need an audit?
Under the corporate tax law, an audit is required where revenue exceeds AED 50 million and for every Qualifying Free Zone Person regardless of size. Below that, the tax law requires none — but many free zone and licensing authorities require audited accounts for licence renewal anyway, so check your authority rather than assuming.
How long do I keep the records?
Seven years from the end of the tax period they relate to, under Article 56. The obligation applies even if you owe nothing: a business under Small Business Relief and an exempt person must both keep the records supporting their position. Do not apply a five-year VAT retention habit to corporate tax records.
What do the FTA actually ask for first?
The financial statements, the reconciliation from accounting profit to taxable income, and the support behind every add-back. After that, the related-party file — transactions, pricing basis and signed intercompany agreements — which is the most commonly missing item in an otherwise tidy set of books.
Scope note: General educational information for Pakistan, not a legal opinion or a substitute for advice based on your documents. Law, notifications, portal procedures and individual facts can change the result.
