What Accounting Records Must UAE Companies Maintain?
📋 Table of Contents
- Introduction to UAE Accounting Records Requirements
- Mandatory Accounting Records for UAE Companies
- Statutory Books and Legal Requirements
- Record Retention Periods in UAE
- VAT-Specific Documentation Requirements
- Corporate Tax Record-Keeping Obligations
- Digital vs. Physical Records: What's Acceptable?
- Penalties for Non-Compliance
- Best Practices for Record Management
- Frequently Asked Questions
- Related Resources
Introduction to UAE Accounting Records Requirements
The United Arab Emirates has established comprehensive regulations governing the maintenance of accounting records for businesses operating within its jurisdiction. Understanding and complying with these requirements is not merely a legal obligation but a fundamental aspect of good corporate governance that ensures financial transparency, facilitates accurate tax compliance, and supports informed business decision-making.
With the introduction of corporate tax in 2023 and the ongoing enforcement of VAT regulations since 2018, the UAE's regulatory framework has become increasingly sophisticated. Companies must maintain detailed financial documentation that meets the standards set by the Federal Tax Authority (FTA), the Ministry of Economy, and other relevant regulatory bodies. The scope of these requirements extends beyond basic bookkeeping to encompass comprehensive documentation of all financial transactions, contracts, and business activities.
The importance of proper record-keeping cannot be overstated. Adequate documentation serves multiple critical functions: it provides evidence for tax calculations and submissions, enables effective financial management and analysis, facilitates statutory audits and regulatory inspections, supports legal proceedings when necessary, and demonstrates compliance with UAE commercial laws. For businesses operating in free zones, mainland, or offshore jurisdictions, specific additional requirements may apply depending on the licensing authority and business structure.
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🎯 Key Regulatory Framework
UAE companies must comply with multiple regulatory frameworks simultaneously:
- Federal Decree-Law No. 32 of 2021 (Commercial Companies Law)
- Federal Decree-Law No. 47 of 2022 (Corporate Tax Law)
- Federal Decree-Law No. 8 of 2017 (VAT Law)
- Cabinet Decision No. 58 of 2023 (Tax Records Retention)
- International Financial Reporting Standards (IFRS)
Mandatory Accounting Records for UAE Companies
UAE commercial legislation mandates that all companies maintain a comprehensive set of accounting records that accurately reflect their financial position and business operations. These records must be sufficient to allow a competent person to ascertain the company's financial position with reasonable accuracy at any time.
Primary Financial Statements
Every UAE company must prepare and maintain the following core financial statements in accordance with internationally accepted accounting principles:
| Financial Statement | Description | Frequency | Key Components |
|---|---|---|---|
| Balance Sheet | Statement of financial position showing assets, liabilities, and equity | Annual (minimum) | Fixed assets, current assets, liabilities, shareholder equity |
| Profit & Loss Statement | Income statement showing revenues, expenses, and net profit/loss | Annual (minimum) | Revenue streams, cost of sales, operating expenses, net income |
| Cash Flow Statement | Analysis of cash inflows and outflows from operations, investing, and financing | Annual (minimum) | Operating activities, investing activities, financing activities |
| Notes to Accounts | Detailed explanations and supplementary information | Annual (minimum) | Accounting policies, contingent liabilities, related party transactions |
| Director's Report | Management commentary on business performance and outlook | Annual | Business review, risks, future prospects, governance |
Transaction Documentation
Beyond formal financial statements, companies must maintain detailed records of individual transactions. This documentation forms the foundation of your accounting system and must be retained in an organized, accessible manner. The comprehensiveness of transaction records directly impacts your ability to defend positions during tax audits and regulatory reviews.
📄 Essential Transaction Documents
- Sales Records: Sales invoices, credit notes, delivery notes, sales orders, customer contracts, revenue recognition schedules
- Purchase Records: Purchase invoices, supplier contracts, purchase orders, goods received notes, payment vouchers
- Banking Records: Bank statements, bank reconciliations, deposit slips, payment receipts, electronic fund transfer confirmations
- Payroll Records: Employee contracts, salary registers, wage sheets, timesheets, payroll tax calculations, end-of-service benefit provisions
- Inventory Records: Stock registers, inventory valuation reports, stock movement records, write-off documentation
- Asset Records: Fixed asset registers, depreciation schedules, asset acquisition documents, disposal records, revaluation reports
Supporting Documentation
Each transaction recorded in your accounting books must be supported by appropriate documentation. The Federal Tax Authority has made it clear that unsupported entries may be disallowed during tax assessments. Here's what constitutes adequate supporting documentation:
Document Hierarchy for Transaction Support
For companies engaged in international trade or transfer pricing arrangements, additional documentation requirements apply. These include customs declarations, import/export licenses, transfer pricing documentation, intercompany agreements, and country-by-country reporting where applicable. Learn more about UAE Corporate Tax 2025 requirements.
Statutory Books and Legal Requirements
In addition to financial records, UAE companies are required to maintain certain statutory books and registers as mandated by the Commercial Companies Law. These records ensure compliance with corporate governance requirements and facilitate regulatory oversight.
| Statutory Book | Content Requirements | Mandatory For |
|---|---|---|
| Register of Shareholders | Names, addresses, shareholdings, share transfers, dividends paid | All companies with share capital |
| Minutes of Meetings | Board meetings, general assembly meetings, resolutions passed | All limited liability companies |
| Register of Directors | Director details, appointments, resignations, powers granted | Companies with board of directors |
| Register of Charges | Mortgages, liens, pledges on company assets | Companies with secured borrowings |
| Register of Debentures | Details of debentures issued, holders, terms | Companies issuing debentures |
| Register of Contracts | Major contracts, related party transactions | All companies (best practice) |
⚠️ Important Legal Requirement
According to Article 18 of the Commercial Companies Law, companies must keep their statutory books at their registered office or another location within the UAE as notified to the relevant authority. These books must be made available for inspection by shareholders, directors, and authorized regulatory officials during normal business hours.
Trade License and Commercial Registration
Companies must maintain current copies of their trade license, commercial registration certificate, and all amendments. These foundational documents establish your legal authority to conduct business and must be renewed in accordance with the issuing authority's requirements. For guidance on obtaining licenses, see our article on How to Get an Audit License.
Record Retention Periods in UAE
The UAE has established specific retention periods for different categories of business records. Non-compliance with these retention requirements can result in significant penalties and may impair your ability to defend tax positions or legal claims.
Mandatory Retention Periods by Document Type
| Document Category | Retention Period | Legal Basis | Notes |
|---|---|---|---|
| Tax Records (VAT & Corporate Tax) | 5 years | Cabinet Decision No. 58 of 2023 | From end of tax period |
| Financial Statements | 5 years (minimum) | Commercial Companies Law | Permanent retention recommended |
| Commercial Books | 5 years | Commercial Transactions Law | From date of last entry |
| Employment Records | 2 years after termination | UAE Labour Law | Includes contracts, payroll |
| Import/Export Documents | 5 years | Customs regulations | From date of clearance |
| Corporate Documents | Permanent | Best practice | MOA, AOA, license, registrations |
| Audit Reports | Permanent | Recommended practice | Essential for historical reference |
| Tax Assessments & Correspondence | 7 years (recommended) | Prudent practice | Beyond statutory minimum |
✅ Best Practice Retention Policy
While legal minimums provide a baseline, many successful UAE companies adopt more conservative retention policies:
- Maintain tax records for 7 years instead of the mandatory 5 years to accommodate extended audit windows
- Keep permanent archives of all financial statements, audits, and corporate documents
- Implement digital archiving systems with multiple backup locations for critical documents
- Create comprehensive document retention schedules that specify when documents can be destroyed
- Establish clear procedures for legal holds that prevent destruction of relevant documents during litigation
The retention period begins from different dates depending on the document type. For tax records, the five-year period starts from the end of the relevant tax period, not from the date of the transaction. For commercial books, the period begins from the date of the last entry. Companies must maintain clear documentation of when retention periods commence to ensure compliance. Understanding What Tax Records Must UAE Companies Maintain is crucial for compliance.
VAT-Specific Documentation Requirements
VAT-registered businesses in the UAE face additional record-keeping obligations under Federal Decree-Law No. 8 of 2017 and its Executive Regulations. The Federal Tax Authority has issued comprehensive guidance on VAT documentation requirements, emphasizing that proper record-keeping is essential for claiming input tax credits and demonstrating compliance.
Tax Invoices and Documentation
VAT-registered persons must issue tax invoices for all taxable supplies and maintain copies for the statutory retention period. These invoices must comply with specific format requirements outlined by the FTA. Learn about What is the Correct Tax Invoice Format in UAE.
| Document Type | When Required | Mandatory Information |
|---|---|---|
| Tax Invoice | Supplies exceeding AED 10,000 | TRN, invoice date, description, tax amount, total, supplier details |
| Simplified Tax Invoice | Supplies up to AED 10,000 | TRN, date, description, tax-inclusive amount |
| Credit Note | Adjustments to taxable supplies | Reference to original invoice, reason for adjustment, adjusted amounts |
| Debit Note | Additional charges after supply | Reference to original invoice, description of additional charge |
| Alternative Evidence | When tax invoice not available | Customs declaration, bank statement, contract with payment proof |
Input Tax Recovery Documentation
To recover input tax, businesses must maintain comprehensive documentation demonstrating that the supply was used for business purposes and that VAT was properly charged. The burden of proof rests with the claimant, making meticulous record-keeping essential.
📊 Required Records for Input Tax Recovery
- Valid tax invoices showing the supplier's TRN and VAT amount
- Evidence that consideration was paid or will be paid
- Documentation linking the expense to business activities
- For imported goods, customs declarations and payment evidence
- For specific categories (entertainment, vehicles), additional justification
- Allocation records for mixed-use expenses
VAT Return Supporting Documentation
Each VAT return submission must be supported by underlying records that reconcile to your accounting system. The FTA may request these reconciliations during audits, and inability to provide them can result in assessments and penalties. Our VAT Return Filing Services Dubai can help ensure compliance.
VAT Return Documentation Checklist
Companies must also maintain records of supplies subject to the reverse charge mechanism, designated zone transactions, and intra-GCC supplies. Special documentation requirements apply to these categories, and failure to maintain proper records can result in denied input tax recovery. For VAT registration requirements, see What is the VAT Registration Threshold in UAE.
Corporate Tax Record-Keeping Obligations
With the implementation of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, UAE companies face new and comprehensive record-keeping requirements. The corporate tax law requires businesses to maintain records that enable accurate determination of taxable income and support all amounts declared in tax returns.
Financial Statements and Tax Computations
Companies subject to corporate tax must prepare financial statements in accordance with internationally accepted accounting standards and maintain detailed tax computations that reconcile accounting profit to taxable income. This reconciliation is a critical document that must be supported by comprehensive working papers.
| Document Category | Purpose | Key Components |
|---|---|---|
| Audited Financial Statements | Starting point for tax calculation | IFRS-compliant statements with audit opinion |
| Tax Computation | Reconciliation of accounting to taxable profit | Book profit, permanent differences, temporary differences, taxable income |
| Deferred Tax Analysis | Calculation of deferred tax assets/liabilities | Timing differences, carryforwards, recognition criteria |
| Tax Losses Schedule | Tracking of tax loss carryforwards | Loss origin, utilization, expiry dates |
| Transfer Pricing Documentation | Support for related party transactions | Functional analysis, comparability analysis, pricing methodology |
| Substance Documentation | Evidence of adequate substance in UAE | CIGA records, employee details, asset ownership, expenditure |
Transfer Pricing and Related Party Transactions
Companies engaged in transactions with related parties must maintain contemporaneous transfer pricing documentation. This requirement applies even if the transactions are domestic, as the corporate tax law adopts broad anti-avoidance provisions. The documentation must demonstrate that transactions are conducted at arm's length.
⚠️ Transfer Pricing Documentation Deadlines
Master File and Local File: Must be prepared contemporaneously, meaning they should be ready by the time the corporate tax return is filed. While not required to be submitted with the return, these documents must be provided to the FTA within 30 days of request.
Country-by-Country Report: For groups with consolidated revenue exceeding AED 3.15 billion, must be filed within 12 months of the fiscal year-end.
Tax Loss Documentation
Companies claiming tax loss carryforwards must maintain detailed records demonstrating the origin of losses, their calculation, and the extent to which they have been utilized. Losses can only be carried forward if the company maintains the same ownership and continues substantially the same business activity.
📋 Tax Loss Record Requirements
- Financial statements for the year losses were incurred
- Tax computation showing the loss calculation
- Evidence of ownership continuity (shareholder register, ownership agreements)
- Documentation of business activities in loss years and subsequent years
- Schedule tracking loss utilization across tax periods
- Analysis of any changes in business model or activities
Digital vs. Physical Records: What's Acceptable?
The UAE regulatory framework embraces digital transformation and explicitly recognizes electronic records as acceptable evidence, provided they meet certain conditions. The Federal Tax Authority has confirmed that electronic records carry the same evidentiary weight as physical documents when properly maintained.
Requirements for Electronic Record-Keeping
Electronic record-keeping systems must ensure the integrity, authenticity, and accessibility of stored documents. The following conditions must be met for electronic records to be compliant:
| Requirement | Description | Implementation Example |
|---|---|---|
| Integrity | Records must be protected from alteration or deletion | Audit trails, version control, restricted access rights |
| Authenticity | Origin and authenticity must be verifiable | Digital signatures, timestamps, secure login credentials |
| Readability | Records must be easily accessible and readable | Searchable format, standard file types (PDF, Excel) |
| Completeness | All required information must be captured | Automated data capture, mandatory field validation |
| Availability | Records must be accessible within UAE | UAE-based servers or accessible cloud storage |
| Backup | Regular backups to prevent data loss | Daily automated backups, disaster recovery plan |
Cloud-Based Accounting Systems
Many UAE businesses now utilize cloud-based accounting software such as QuickBooks, Xero, Zoho Books, or SAP Business One. These systems are generally acceptable provided they meet the requirements outlined above. However, companies must ensure they can produce records in the required format upon request by authorities.
✅ Advantages of Digital Record-Keeping
- Space efficiency and reduced physical storage costs
- Enhanced security with encryption and access controls
- Easy retrieval and search functionality
- Automatic backup and disaster recovery capabilities
- Simplified audit procedures with digital trail
- Remote access for authorized users
- Integration with tax filing systems
- Reduced environmental impact
Hybrid Systems: Best of Both Worlds
Many UAE companies adopt hybrid approaches, maintaining primary records electronically while retaining physical copies of critical documents such as original contracts, notarized agreements, and documents requiring wet signatures. This approach provides redundancy while capturing the benefits of digital systems.
Recommended Document Storage by Type
| Document Category | Recommended Format | Rationale |
|---|---|---|
| Transaction Documents | Digital (scanned) | High volume, frequent access, easy retrieval |
| Contracts & Agreements | Digital + Physical Original | Legal significance, notarization, wet signatures |
| Corporate Documents | Digital + Physical Original | Permanent retention, official certificates |
| Financial Statements | Digital (PDF) | Audited, signed, permanent archive |
| Tax Returns | Digital (filed electronically) | Electronic filing requirement, system generated |
| Correspondence | Digital | Email-based, cloud storage |
Penalties for Non-Compliance
Failure to maintain adequate accounting records or provide them upon request can result in substantial penalties under various UAE laws. The regulatory framework imposes both fixed penalties and percentage-based fines depending on the nature and severity of the violation.
🚨 Penalty Framework for Record-Keeping Violations
| Violation | First Offense | Repeated Offense | Legal Basis |
|---|---|---|---|
| Failure to keep tax records | AED 10,000 | AED 50,000 | Federal Decree-Law No. 28 of 2022 |
| Failure to provide records within specified time | AED 20,000 | AED 50,000 | Tax Procedures Law |
| Maintaining records in non-compliant format | AED 10,000 | AED 20,000 | FTA regulations |
| Destroying records before retention period | AED 10,000 | AED 50,000 | Cabinet Decision No. 58 of 2023 |
| Providing false or inaccurate information | AED 50,000 or 50% of tax involved | Criminal prosecution possible | Tax Evasion provisions |
| Non-maintenance of statutory books | AED 5,000 - AED 50,000 | AED 10,000 - AED 100,000 | Commercial Companies Law |
Indirect Consequences of Poor Record-Keeping
Beyond direct penalties, inadequate record-keeping can have serious indirect consequences that impact your business operations and financial position:
⚠️ Potential Consequences Beyond Fines
- Tax Assessment: When records are insufficient, tax authorities may estimate your taxable income, often unfavorably
- Denied Input Tax Recovery: Without proper documentation, VAT input claims will be rejected, increasing your effective tax burden
- Audit Complications: Poor records lead to prolonged audits, additional professional fees, and management distraction
- Legal Disadvantage: In disputes or litigation, inability to produce records weakens your legal position
- Banking Relationships: Banks may require detailed financial records for credit facilities; poor records limit financing options
- Commercial Relationships: Major clients and partners may require evidence of financial health and compliance
- License Renewal: Some licensing authorities require evidence of proper record-keeping for license renewal
- Regulatory Scrutiny: Pattern of non-compliance invites increased regulatory attention and frequent inspections
For more information on penalties, see our guide on Corporate Tax Penalties in UAE.
Mitigating Penalty Risks
Companies can reduce their exposure to penalties by implementing robust compliance programs. Voluntary disclosure of errors before audit findings, implementing remedial measures promptly, and demonstrating good faith efforts to comply can result in reduced penalties or leniency from authorities.
Best Practices for Record Management
Implementing effective record management practices not only ensures regulatory compliance but also enhances operational efficiency and supports strategic decision-making. Leading UAE companies adopt systematic approaches to record-keeping that go beyond minimum legal requirements.
Establishing a Record Management Framework
🎯 10-Step Framework for Effective Record Management
- Document Retention Policy: Create a comprehensive written policy specifying what records to keep, for how long, and in what format. This policy should be approved by management and communicated throughout the organization.
- Chart of Accounts: Implement a well-structured chart of accounts that reflects your business operations and facilitates compliance reporting. Ensure consistency in classification across all transactions.
- Approval Hierarchies: Establish clear approval authorities for different transaction types and amounts. Document these authorities and ensure they're reflected in your accounting system.
- Segregation of Duties: Separate responsibilities for transaction authorization, recording, and custody to prevent errors and fraud. Document who performs each function.
- Regular Reconciliations: Implement monthly reconciliation procedures for all balance sheet accounts. Reconciliations should be reviewed and approved by appropriate personnel.
- Backup Procedures: Establish automated daily backups of electronic records with off-site storage. Test recovery procedures regularly to ensure backups are functional.
- Access Controls: Implement role-based access to accounting systems. Maintain logs of user activities and review them periodically for unauthorized access.
- Document Indexing: Create systematic filing and indexing systems that enable quick retrieval. Use consistent naming conventions for electronic files.
- Periodic Reviews: Conduct quarterly reviews of record-keeping practices to identify gaps and areas for improvement. Update procedures as regulations change.
- Staff Training: Provide regular training to accounting and administrative staff on record-keeping requirements and procedures. Document training activities.
Technology Solutions for Record Management
Modern accounting software and document management systems can significantly enhance your record-keeping capabilities. When selecting technology solutions, consider the following factors:
| System Type | Primary Function | Key Features to Look For |
|---|---|---|
| Accounting Software | Transaction recording and financial reporting | Multi-currency, VAT compliance, audit trail, user permissions, backup |
| Document Management | Electronic storage and retrieval of documents | OCR capability, version control, search functionality, secure access |
| Invoice Management | Automated invoice processing and approval | Email integration, approval workflows, matching, e-archiving |
| Expense Management | Employee expense claims and reimbursements | Mobile app, receipt capture, policy enforcement, integration |
| Tax Compliance Platform | VAT and corporate tax calculations and filing | FTA integration, return preparation, submission tracking |
Preparing for Audits and Inspections
Whether facing a statutory audit, tax audit, or regulatory inspection, proper record organization significantly reduces stress and ensures efficient proceedings. Consider implementing audit readiness protocols that maintain your records in a state of continuous audit preparedness. Learn more about Common Audit Findings and How to Address Them.
📊 Audit Readiness Checklist
- Maintain a comprehensive audit file with key documents readily accessible
- Prepare and update trial balances monthly with supporting schedules
- Keep reconciliations current and properly documented
- Organize tax records separately with clear references to source documents
- Document accounting policies and any changes to them
- Maintain a issues log to track unresolved matters or unusual transactions
- Create index systems that allow quick location of any requested document
- Conduct internal pre-audit reviews to identify and resolve issues proactively
For detailed guidance on audit requirements, see our article on Financial Records Requirements for Audit.
Industry-Specific Considerations
Different industries face unique record-keeping requirements beyond general corporate obligations. Manufacturing businesses must maintain production records and inventory movements, retail operations need detailed point-of-sale data and inventory management systems, professional services firms must track time and disbursements, and construction companies require job costing and contract documentation. Understanding your industry-specific requirements is essential for comprehensive compliance. For industrial businesses, see What Permits Do Industrial Businesses Need and Factory License and Compliance Requirements.
For retail businesses, proper record-keeping of cost of goods sold is crucial. Read our guide on How to Calculate Cost of Goods Sold for Retail.
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❓ Frequently Asked Questions
Failure to produce accounting records during a tax audit can result in severe consequences. First, you will face administrative penalties starting at AED 20,000 for failure to provide records within the specified timeframe. More significantly, when records are insufficient, the Federal Tax Authority has the power to make best judgment assessments, essentially estimating your tax liability based on available information. These assessments are typically unfavorable to the taxpayer and can result in substantially higher tax bills than if proper records were maintained.
Additionally, without proper documentation, you cannot defend your tax positions, input tax recovery claims may be denied, and any expenses claimed as deductions may be disallowed. The audit process will be significantly prolonged, and you may be subject to increased scrutiny in future periods. In cases of deliberate destruction of records or providing false information, criminal prosecution is possible under tax evasion provisions.
To avoid these consequences, it's essential to maintain comprehensive records for the full statutory retention period and implement systems that enable quick retrieval when requested. If you discover gaps in your records, seek professional assistance immediately to reconstruct what you can and prepare an explanation for authorities.
While UAE tax law does not explicitly prohibit storing records on foreign servers, the records must be readily accessible within the UAE at all times. This means that if you use cloud-based storage or servers located outside the UAE, you must ensure that authorized UAE authorities can access these records immediately upon request without technical, legal, or practical barriers.
Practical considerations for foreign server storage include: ensuring you have sufficient internet connectivity to access records instantly, confirming that data privacy laws in the server location don't restrict access by UAE authorities, maintaining the ability to download and print records in a readable format, and potentially keeping duplicate copies on UAE-based systems for redundancy.
Many multinational companies successfully use international cloud solutions by ensuring they have local access points and can demonstrate immediate availability. However, purely offshore storage with access restrictions or delays is not acceptable. When setting up your systems, consult with IT and legal professionals to ensure your storage solution meets both data security requirements and regulatory accessibility standards.
The UAE accepts accounting records maintained in either Arabic or English, as both are recognized business languages. However, if your records are maintained in a language other than Arabic or English, you must provide certified Arabic or English translations upon request by authorities. This translation requirement can cause delays and additional costs during audits or inspections, so it's advisable to maintain records in either Arabic or English from the outset.
Most businesses in the UAE maintain their primary accounting records in English, as this is the predominant business language and most accounting software is English-based. Arabic may be used for documents required by specific authorities or when dealing primarily with Arabic-speaking customers and suppliers. What's most important is consistency – once you choose a language for your accounting records, maintain that consistently throughout all documentation.
For documents that must be submitted to government authorities, check specific requirements as some forms and filings must be in Arabic. The Federal Tax Authority's systems support both Arabic and English, and companies can choose their preferred language for tax filings. If you operate with significant volumes of Arabic documentation, ensure your accounting staff can process these documents accurately or have access to translation services.
Inadequate VAT record-keeping carries both immediate penalties and long-term consequences. The Federal Tax Authority imposes a penalty of AED 10,000 for failure to keep proper tax records, which increases to AED 50,000 for repeated violations. However, the financial impact extends far beyond these fixed penalties.
The most significant consequence is the potential denial of input VAT recovery. Without valid tax invoices and proper documentation linking expenses to your business, you cannot claim input tax credits. This effectively increases your VAT burden by 5% on all undocumented expenses. For businesses with significant operating costs, this can amount to hundreds of thousands of dirhams annually.
Additionally, poor VAT record-keeping can lead to errors in VAT returns, resulting in either underpayment (triggering penalties and interest) or overpayment (unnecessary cash flow drain). During VAT audits, the inability to substantiate return figures may result in assessments, additional tax demands, and penalties of up to 50% of unpaid tax in cases of negligence. The FTA may also deny refund claims for zero-rated or exempt supplies if documentation is insufficient.
Beyond financial impacts, persistent record-keeping failures may result in your business being subject to increased FTA monitoring, more frequent audits, and potential difficulties in future dealings with tax authorities. To avoid these issues, implement robust invoice management systems, maintain proper filing procedures, and conduct regular internal reviews of your VAT documentation. For expert assistance, our team provides comprehensive VAT compliance services including record-keeping system setup and ongoing support.
When closing or selling a UAE business, proper handling of accounting records is crucial both for regulatory compliance and to protect against future liabilities. The record retention requirements continue even after business closure – you must maintain all tax records for five years from the end of the tax period to which they relate, regardless of whether your business is operational.
For business closures, before deregistering your company, you must: submit final tax returns for VAT and corporate tax, undergo any required closing audits, settle all outstanding tax liabilities, and obtain clearance certificates from relevant authorities. After closure, designate a responsible person (typically a director or shareholder) to retain the records for the statutory period. Store records securely and ensure they remain accessible if authorities request them during the retention period.
In the case of business sales, the approach differs depending on whether you're selling shares or assets. In a share sale, the company continues to exist under new ownership, and records typically transfer to the new owners as part of the transaction. However, the seller should retain copies of key documents for protection. In an asset sale, the selling entity continues to exist and must retain all records relating to its operations. The sale agreement should clearly specify responsibility for record retention and access rights.
Key considerations include: ensuring all financial statements are up to date and audited if required, completing all pending reconciliations, documenting any outstanding contingencies or liabilities, organizing records systematically for handover or archiving, creating comprehensive indexes of retained records, and documenting the retention arrangement and responsible person's contact information. Consider using professional archiving services or trusted document storage facilities to ensure security and accessibility throughout the retention period. Our firm can assist with closure procedures, final audits, and establishing appropriate record retention arrangements.
