Guide to Accounting Requirements for Dubai Businesses
📌 Article Summary
Every business operating in Dubai — whether on the mainland or in a free zone — is legally required to maintain proper accounting records, prepare IFRS-compliant financial statements, and meet VAT, corporate tax, and audit obligations. With the introduction of mandatory e-invoicing starting July 2026 and stricter FTA enforcement through automated cross-checking systems, compliance has never been more critical. This comprehensive guide covers every accounting requirement Dubai businesses must fulfill in 2026, including record-keeping rules, tax filing deadlines, audit mandates, penalties for non-compliance, and expert strategies to stay ahead. One Desk Solution simplifies the entire process with end-to-end accounting, tax, and audit services tailored for Dubai businesses.
1. Overview: Dubai's Accounting Regulatory Landscape
Dubai has evolved rapidly from a tax-free business haven into a sophisticated, compliance-driven economy. The introduction of VAT in January 2018, Economic Substance Regulations (ESR) in 2019, and Corporate Tax at 9% in June 2023 has fundamentally transformed the accounting obligations for every business operating in the emirate. In 2026, the upcoming mandatory e-invoicing system adds another critical layer of compliance.
Today, maintaining proper accounting records is not merely good business practice — it's a legal mandate under multiple UAE federal laws. Whether you're a sole proprietorship in Deira, a tech startup in DMCC, or a manufacturing company in Jebel Ali Free Zone, you must maintain IFRS-compliant books, file regular tax returns, undergo annual audits, and retain records for up to 7 years. The Federal Tax Authority (FTA) now uses automated data-matching systems to cross-check VAT returns, corporate tax filings, audited financial statements, and customs records — making inconsistencies far easier to detect than ever before.
This guide provides a structured, complete breakdown of every accounting requirement your Dubai business must meet in 2026 and beyond. For businesses seeking professional support, One Desk Solution's accounting and bookkeeping services ensure full compliance with all regulatory requirements while letting you focus on growth.
Stay Fully Compliant with Dubai's Accounting Laws 🇦🇪
One Desk Solution provides end-to-end accounting, VAT, corporate tax, and audit services for Dubai businesses — mainland and free zone.
2. The Legal Framework: Key Laws Governing Accounting
Dubai's accounting requirements are governed by multiple overlapping federal laws. Understanding which laws apply to your business is the first step toward achieving full compliance.
| Law / Regulation | Key Requirement | Applies To | Record Period |
|---|---|---|---|
| Commercial Companies Law (Federal Decree-Law No. 32 of 2021) |
Maintain accounting records, annual financial statements, annual audit | All companies | 5 years |
| VAT Law (Federal Decree-Law No. 8 of 2017) |
VAT registration, filing, invoicing, input/output tax records | Businesses with turnover ≥ AED 375,000 | 5 years |
| Corporate Tax Law (Federal Decree-Law No. 47 of 2022) |
Tax registration, annual returns, transfer pricing docs | All taxable persons | 7 years |
| Tax Procedures Law (Federal Decree-Law No. 28 of 2022, amended 2025) |
Record-keeping, penalties, refund procedures, FTA audit powers | All taxpayers | 7 years |
| AML/CFT Regulations (Federal Decree-Law No. 20 of 2018) |
UBO register, transaction monitoring, suspicious activity reporting | Designated businesses | 5 years |
| E-Invoicing Law (Federal Decree-Law No. 17 of 2025) |
Electronic invoice issuance, ASP appointment, data transmission to FTA | All VAT-registered (phased) | As per VAT Law |
📘 Key Point: Multiple laws may overlap for the same business. For example, a DMCC trading company must comply with the Commercial Companies Law, VAT Law, Corporate Tax Law, AML regulations, and free zone-specific rules — all simultaneously. This is why having a professional accounting service provider is essential.
3. Bookkeeping & Record-Keeping Requirements
Under Article 26 of the UAE Commercial Companies Law, every Dubai company must maintain accounting records that accurately reflect all transactions and financial positions at any given time. This is mandatory for all entity types — LLCs, sole proprietorships, partnerships, branches of foreign companies, and free zone entities.
What Records Must Be Maintained?
General Ledger & Journals
Complete record of all debit/credit entries, chronologically organized with supporting documentation.
Tax Invoices & Credit Notes
All sales and purchase invoices, tax credit notes, and debit notes as per FTA format requirements.
Bank Statements & Reconciliations
Monthly bank statements with corresponding reconciliation reports for all business accounts.
Contracts & Agreements
All sales, purchase, employment, and service contracts that underpin financial transactions.
Payroll Records & WPS Data
Employee salary records, WPS files, end-of-service calculations, and leave encashment details.
Fixed Asset Register
Details of all capital assets — acquisition cost, depreciation schedules, disposal records.
Inventory Records
Stock registers with quantities, values, movement logs, and periodic physical count records.
VAT & Tax Workpapers
VAT return calculations, corporate tax computations, transfer pricing documentation.
⚠️ Penalty Alert: Under Article 349 of the Commercial Companies Law, failure to maintain accounting records at the company's head office for a minimum of 5 years attracts a penalty of AED 20,000 to AED 100,000. Under the Tax Procedures Law, the first-time fine is AED 10,000, increasing to AED 20,000 for repeat offenses.
4. IFRS Compliance & Financial Statement Preparation
Dubai businesses must prepare their financial statements in accordance with International Financial Reporting Standards (IFRS) — this is explicitly required under the Commercial Companies Law. Financial statements must provide a true and fair view of the company's financial position, performance, and cash flows.
Required Financial Statements
| Statement | Purpose | Key IFRS Standards |
|---|---|---|
| Statement of Financial Position (Balance Sheet) | Shows assets, liabilities, and equity at a specific date | IAS 1 |
| Statement of Profit or Loss (Income Statement) | Reports revenue, expenses, and net profit/loss for the period | IAS 1, IFRS 15 |
| Statement of Cash Flows | Tracks cash inflows and outflows across operating, investing, and financing activities | IAS 7 |
| Statement of Changes in Equity | Shows movements in owner's equity during the reporting period | IAS 1 |
| Notes to Financial Statements | Provides detailed disclosures, accounting policies, and supplementary information | IAS 1, IAS 8 |
💡 Pro Tip: Under Article 87 of the Commercial Companies Law, the company manager must prepare the annual budget, profit & loss account, and an annual report on the company's financial position — with recommendations on profit distribution — within 3 months from the end of the financial year. Our expert accounting team ensures timely preparation of IFRS-compliant financials.
5. VAT Compliance Requirements
Value Added Tax at 5% has been in effect since January 2018, and compliance requirements are tightening significantly in 2026 with new amendments under Federal Decree-Law No. 16 of 2025. Here's everything your Dubai business must know:
VAT Registration Thresholds
| Threshold | Annual Taxable Supplies | Action Required |
|---|---|---|
| Mandatory Registration | Exceeds AED 375,000 | Must register within 30 days |
| Voluntary Registration | Exceeds AED 187,500 | May register voluntarily |
| Below Threshold | Below AED 187,500 | No registration required |
Key VAT Compliance Obligations
-
Tax Invoice Issuance
Issue FTA-compliant tax invoices for all taxable supplies within 14 days. Invoices must include TRN, date, description, amounts in AED, and VAT rate.
-
Periodic VAT Return Filing
File VAT returns (quarterly or monthly, as assigned by FTA) through the EmaraTax portal within 28 days after the tax period ends.
-
Input/Output Tax Tracking
Maintain detailed records of all output VAT charged and input VAT claimed. Ensure proper documentation for all reclaimed input tax.
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Reverse Charge Mechanism (Updated 2026)
Self-invoice requirement removed from January 2026 — but you must retain supporting documents for all RCM transactions instead. Learn more about VAT treatment of import services under reverse charge.
-
5-Year Refund Claim Deadline (New 2026)
Excess VAT refunds must now be claimed within 5 years from the end of the relevant tax period — unclaimed balances after this period expire permanently.
🚨 2026 Change — Taxpayer Due Diligence: The FTA can now deny input VAT deductions if it determines the supply was part of a tax-evasion arrangement, even if you weren't directly involved. Businesses must verify the legitimacy of suppliers before claiming input tax. Work with professional tax advisors to implement proper due diligence procedures.
6. Corporate Tax Accounting Obligations
Since June 2023, the UAE levies corporate tax at 9% on taxable profits exceeding AED 375,000 (0% below this threshold). All Dubai businesses — including those with zero tax liability — must meet specific corporate tax accounting requirements.
| Obligation | Details | Deadline |
|---|---|---|
| Tax Registration | Register with FTA on EmaraTax portal — mandatory for all entities | Before first tax return due date |
| Tax Return Filing | Submit annual corporate tax return electronically via EmaraTax | Within 9 months of financial year-end |
| Tax Payment | Pay any tax due via bank transfer, e-dirham, or approved methods | Same deadline as return filing |
| Financial Statements | IFRS-compliant audited financial statements supporting the return | Prepared before filing |
| Transfer Pricing Documentation | Local file, master file, and country-by-country report for related-party transactions | Maintained contemporaneously |
| Record Retention | All financial and supporting documents | Minimum 7 years |
UAE Corporate Tax Rate Structure
💡 Free Zone Businesses: Qualifying Free Zone Persons (QFZPs) enjoy a 0% rate on qualifying income, but must maintain strict economic substance, proper income segregation, and transfer pricing compliance. Any errors in classification can trigger 9% tax on all income. See our guides on corporate tax for investment funds and capital gains treatment on property.
7. Annual Audit Requirements
Under Article 27 of the Commercial Companies Law, Dubai companies are required to appoint a UAE-licensed auditor and undergo an annual audit of their financial statements. The audited financials serve as the foundation for corporate tax returns, FTA compliance verification, and stakeholder reporting.
| Business Type | Annual Audit | Details |
|---|---|---|
| Mainland LLC | Mandatory | Must appoint approved auditor; submit audited accounts to DED |
| Mainland Branch (Foreign Co.) | Mandatory | Local branch audit required alongside parent company |
| DMCC / JAFZA / DAFZA Entities | Mandatory | Annual audited financials required for license renewal |
| DIFC Companies | Mandatory | DIFC Companies Law requires 6-year record retention |
| Smaller Free Zone Entities | Varies | Some free zones require audit only above certain revenue thresholds |
| Sole Proprietorships | Conditional | Audit may not be mandatory but recommended for FTA compliance |
Audits must be conducted in accordance with International Standards on Auditing (ISA). The auditor must be independent and licensed by the UAE Ministry of Economy. One Desk Solution works with certified audit partners to deliver seamless audit and assurance services for Dubai businesses.
8. E-Invoicing: The 2026–2027 Mandate
The UAE's mandatory electronic invoicing system represents the most significant compliance change since VAT was introduced. Established under Federal Decree-Law No. 17 of 2025, the system will require businesses to issue structured digital invoices (XML/JSON format) transmitted through FTA-accredited Service Providers (ASPs) using the Peppol network.
E-Invoicing Implementation Timeline
E-Invoicing Penalty Structure (Cabinet Decision No. 106 of 2025)
⚠️ Action Required Now: Even if your mandatory compliance date is 2027, businesses should begin preparing immediately — assess current accounting/ERP systems, select an FTA-accredited ASP, test XML/JSON invoice formats, and train staff. Contact our advisory team for implementation support.
9. Record Retention Periods by Law
Different UAE laws prescribe different minimum retention periods for business records. When multiple laws apply (which is the case for most Dubai businesses), always follow the longest applicable period.
Record Retention Requirements by Law (Years)
💡 Best Practice: Retain all financial records for a minimum of 7 years from the end of the relevant tax period to satisfy the Corporate Tax Law — this automatically covers all shorter retention periods. Use cloud-based accounting platforms for secure, accessible, and audit-ready storage.
10. Penalties for Non-Compliance
The FTA and UAE regulatory authorities impose substantial penalties for accounting failures. With automated cross-checking now in place, the risk of detection has increased dramatically.
| Violation | First Offense | Repeat Offense | Source Law |
|---|---|---|---|
| Failure to maintain tax records | AED 10,000 | AED 20,000 | Tax Procedures Law |
| Failure to keep books at head office (5 yrs) | AED 20,000 – 100,000 | Commercial Companies Law | |
| Late VAT return filing | AED 1,000 | AED 2,000 | Tax Procedures Law |
| Incorrect VAT return | AED 1,000 – 50,000 | Tax Procedures Law | |
| Late corporate tax return | Fixed penalties per FTA schedule | Corporate Tax Law | |
| Failure to register for tax | AED 10,000+ | Tax Procedures Law | |
| E-invoicing non-implementation | AED 5,000/month | Cabinet Decision 106/2025 | |
| Missing e-invoice per transaction | AED 100/invoice (cap AED 5,000/mo) | Cabinet Decision 106/2025 | |
🚨 Critical: Penalties compound quickly. A business that fails to maintain records, files VAT returns late, and misses the corporate tax deadline could face AED 50,000+ in combined penalties for a single year. Prevention through professional accounting support is always cheaper than penalties.
11. Mainland vs. Free Zone: Key Differences
| Requirement | Mainland (DED) | Free Zone (e.g., DMCC, JAFZA, DAFZA) |
|---|---|---|
| Bookkeeping | Mandatory (IFRS) | Mandatory (IFRS or zone-approved standards) |
| Annual Audit | Mandatory for most entity types | Mandatory in most major free zones (DMCC, JAFZA, DIFC) |
| VAT | Standard 5% on most supplies | Standard 5% (designated zones may have 0% on goods transfers) |
| Corporate Tax | 9% on profits above AED 375K | 0% for QFZP on qualifying income; 9% on non-qualifying |
| Annual Filing to Authority | Financial statements to DED annually | Audited financials to free zone authority for renewal |
| UBO Register | Maintained internally | Usually maintained with free zone registry |
| ESR Reporting | Required if performing relevant activities | Required if performing relevant activities |
Regardless of structure, all Dubai businesses share the same fundamental requirements: maintain proper books, comply with IFRS, file VAT and corporate tax returns, and retain records. The differences lie mainly in audit thresholds, reporting authorities, and corporate tax incentives for qualifying free zone entities. For guidance on setting up your Dubai business with the right compliance foundation, consult our experts.
12. 2026 Compliance Calendar & Deadlines
Missing deadlines is one of the most common causes of penalties. Use this calendar to stay ahead of every obligation:
| Deadline | Obligation | Frequency | Filed With |
|---|---|---|---|
| 28 days after tax period | VAT return filing + payment | Quarterly / Monthly | FTA (EmaraTax) |
| 9 months after FY-end | Corporate tax return + payment | Annual | FTA (EmaraTax) |
| 3 months after FY-end | Annual financial statements preparation | Annual | Internal / General Assembly |
| 4 months after FY-end | General Assembly meeting (LLCs) | Annual | Internal |
| Before license renewal | Submit audited financials to free zone authority | Annual | Free Zone Authority |
| December 31, 2026 | ESR notification + report submission | Annual | Ministry of Finance |
| December 31, 2026 | Claim all pre-2021 VAT credit balances (new 5-year rule) | One-time transitional | FTA |
| July 1, 2026 | E-invoicing pilot begins (voluntary participation) | Ongoing | FTA via ASP |
⚠️ Critical 2026 Deadline: All excess VAT credit balances from 2018–2020 must be claimed by December 31, 2026 under the new transitional provision. Unclaimed balances will expire permanently. Review your historical VAT positions immediately.
13. How One Desk Solution Helps
One Desk Solution is Dubai's trusted partner for complete accounting compliance. With 500+ clients across all Emirates, our certified team ensures your business meets every obligation — from daily bookkeeping to annual audit, from VAT filing to corporate tax planning.
Accounting & Bookkeeping
IFRS-compliant daily recording, bank reconciliation, financial statement preparation using cloud platforms.
VAT & Corporate Tax
FTA-approved tax agent handling registration, filing, planning, transfer pricing, and compliance reviews.
Audit & Assurance
External audit through certified partners, internal audit, compliance reviews, and IFRS reporting assurance.
Advisory & Consultancy
E-invoicing readiness, financial modeling, cash flow management, and regulatory change advisory.
Business Setup
Company formation with proper accounting foundation from Day 1 — mainland or free zone.
Cloud Technology
Zoho Books, QuickBooks, Xero with real-time dashboards, automated compliance alerts, and client portals.
14. Frequently Asked Questions
Ensure Full Accounting Compliance for Your Dubai Business 🚀
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