Accounting in the UAE

Maintaining Accounting Records in the UAE

In accordance with the legislation of the Emirates, all legal entities registered on the mainland and in free economic zones must keep accounting and tax records from the first day after registration, conduct an annual external audit of financial activities, and submit financial statements. The first report is submitted no later than 18 months, and all subsequent ones annually.

The mandatory requirement for systematic accounting in Dubai and other emirates and conducting an annual audit emerged after the introduction of VAT. With the introduction of corporate income tax from June 1, 2023, the submission of tax returns in the UAE and the provision of declarations became mandatory.

In accordance with Resolution No. 36 of 2017 of the Cabinet of Ministers and Federal Law “On Tax Procedures” (No. 7 of 2017), books, invoices, and other reporting forms should include:

• Accounting balance sheet and profit and loss statement.
• Records of fixed assets.
• Accounting for salaries and wages, income received, and expenses incurred in the course of business activities.
• Records of all inventories and inventory cards.

Article 26 of the Federal Law “On Commercial Companies” (No. 2 of 2015) provides for:

• Mandatory storage of accounting books, checks, and invoices for at least 5 years after the end of the reporting period.
• Accounting in accordance with international financial reporting standards (IFRS).
• The possibility of storing electronic copies of all accounting documents.

For tax purposes, trading, service, and industrial companies must keep accounting records for at least 7 years after the end of the reporting period, and real estate firms for at least 15 years, as regulated by the VAT law.

Experts in the field of accounting at Dynasty Business Adviser will help you understand the rules for organizing and maintaining accounting records in the UAE and, if necessary, take over the accounting services for your business.

Tax Accounting in the UAE

Tax accounting is part of accounting and involves control over income and expenses to determine net profit. The need for its conduct arose with the introduction of VAT and corporate income tax, as these taxes have a taxable base of 375,000 dirhams. Income below this threshold is taxed at a rate of 0%, while any amount exceeding the taxable minimum will be subject to 5% VAT and 9% corporate income tax. Companies may be exempt from paying this tax if they engage in qualified activities and meet certain conditions, at the discretion of the Federal Tax Authority.

Additionally, this accounting is conducted when preparing tax reporting — all offshore companies that are residents of the country are required to submit them in the UAE. Proper tax accounting will help avoid losses from paying fines, so it is better to entrust such work to professionals from Dynasty Business Adviser. We will help you register for tax accounting and take on outsourcing the following activities:

• Control over the income and expenses of your business.
• Submission of tax returns.
• Correct and timely payment of taxes.

Tax registration in the UAE is directly related to the turnover of goods subject to VAT, which is strictly regulated by the state. There are two types of registration:

• Voluntary registration: Registering with the Federal Tax Authority is possible with a turnover of over 183,000 dirhams. In this case, the tax rate is zero, but reporting to the FTA is required, which is done in the following periods:
  • Quarterly.
  • Monthly for a large number of transactions through a bank account.
• Mandatory registration: Mandatory registration is required for turnovers exceeding 375,000 dirhams. Taxpayers have the obligation to:
  • Pay taxes and submit tax returns within the specified timeframe.
  • Provide customers with tax invoices for services rendered.

In some cases, registration with the FTA may be required from the first day of a company’s operations if certain government agencies and counterparties require a tax registration number (TRN).

Even companies not registered as taxpayers must maintain tax records in the Emirates in case their activities are audited by the Federal Tax Authority.

Financial Reporting in the UAE

According to Federal Law No. 32 of 2021 “On Companies,” annual audits and submission of financial reporting in Dubai and other emirates of the UAE are mandatory for:

• Private and public joint-stock companies, as well as local limited liability companies (LLCs) registered on the mainland.
• Companies of various legal forms in some free zones.

In some free zones, the submission of financial audits is a mandatory requirement, while in others, only the preparation of audited financial statements is required without mandatory submission. In any case, all documents must be kept for at least 5 years and presented upon request by regulatory authorities.

Experts from Dynasty Business Adviser will assist with the preparation and submission of your company’s financial statements and will select an accredited auditing firm, as auditing in the UAE must be external and cannot be conducted by a company engaged in accounting.

Requirements for Economic Presence in the UAE

Accounting in Dubai and other emirates is also necessary to confirm Economic Substance Requirements (ESR) in the UAE. Alongside the mandatory declaration filing, submitting an ESR report is an OECD (Organization for Economic Cooperation and Development) requirement as part of the action plan to combat erosion of the tax base.

In accordance with Resolution No. 31 of 2019 by the UAE Cabinet, companies engaged in the following activities are required to confirm substantial economic presence:

• Provision of banking services.
• Insurance.;
• Operation of distribution and service centers.
• Intellectual property business.
• Management of investment funds.
• Shipping business.
• Financial leasing.
• Holding company management.
• Operation of the headquarters of a group of companies.

The deadline for submitting the ESR report is 12 months after the end of the financial year, and failure to comply with this condition may result in penalties, notification to the competent authorities of the investor’s home country, license cancellation, or refusal to renew it.

What’s Included in Our Accounting Services

Our accounting services in the UAE provided by Dynasty Business Adviser include:

• Accounting consultation on record-keeping, preparation, and submission of financial and tax reports.
• Accounting services remotely or at your office.
• Verification of your accounting records compliance with international financial reporting standards.
• Coordination of audits and, if necessary, engagement of authorized external auditors.
• Company registration with the Federal Tax Authority, obtaining a Tax Registration Number (TRN).
• Preparation and submission of ESR reports.
• Handling one-tome tasks such as registration in the Wage Protection System, salary payments through authorized banks, reconciliation of bank transactions with invoices, and other individual client requests.

In our company, you can order a package of services for accounting and tax reporting outsourcing. A bundled solution will cost less than ordering the same services separately.

Stages of Cooperation for Bookkeeping and Tax Accounting

To order accounting support in the UAE from us, you need to:

1. Contact us and discuss all the details of the upcoming cooperation.
2. Enter into a contract specifying the list of services you want to receive and the cost of the work.
3. Provide us with the necessary financial documents according to the checklist or grant access to them at your enterprise.

Upon receipt of the documents, our specialists will start providing accounting services for your company.