It is essential for the company to maintain the books of accounts for at least five years in UAE. It is compulsory to maintain books of accounts in the UAE and any violation will bring you administrative penalties. Businesses need to have qualified accountants to maintain their books of account in compliance with local laws and regulations.
Another good option for companies is to outsource accounting services from the best accounting companies in the UAE. If you hire the best accounting and keeping services, then you can focus more on your company operations and goals.
Keeping proper books of accounts according to regulations would ensure accuracy improvements and receipt of cash. It would help companies in addressing cash flow requirements, planning, and forecast budget, and preventing insolvency and bankruptcy. This helps the stability of the business and effective financial management.
How Should Companies Maintain Books of Accounts as Per UAE Federal Law?
In the UAE, companies need to keep accounting records showing transactions to accurately reveal at any time the financial position of the company. The records must enable the partners or shareholders to confirm that the accountants of the company are in accordance with the provisions of the Law. Let’s discuss some articles of federal law #2 of 2015 list boulder requirements to maintain books of accounts in UAE.
Article 26 on accounting records
companies should maintain their books of accounts at either head office. They should maintain it for at least five years from the end of the financial year of the company.
The companies should keep an electronic copy of the documents and all the records.
Companies have to ensure that they comply with international accounting standards while preparing the periodical and annual accounts.
Responsibility for preparing the accounts
According to article 87 of federal law number 2/20/15 on commercial companies, the manager of a company is needed to prepare the annual budget and profit and loss account. The manager is also required to compile an annual report. This report should be on the financial position of the company and provide recommendations on the distributions of the prophets of the General Assembly. This should be done within three months of the end of the financial year.
Administrative penalties as per UAE Law
Failure to Maintain accounting records
Cording to Article 348 of Federal Law no 2 of 2015, companies should ensure that their books of accounts are maintained as per the law. Failure to keep records will cause a fine of AED 50,000 to AED 500,000.
Failure to Keep Accounting Records for the Period Determined
Article 349 of Federal Law no 2 of 2015, companies should ensure that their books of accountants are in their office for at least 5 years from the end of the financial year of the business. Any company that fails to remain compliant within the time period is obliged to pay a penalty of AED 20, 000 to AED 100,000.
How do Maintain Accounting Records as Per the UAE VAT Law?
The Cabinet Decision 36 of 2017 on the Executive Register of Federal Law No (7) of 2017 on Tax procedures mandates that the firms need to keep accounting records and commercial books. The accounting records and books must include:
- Balance sheet and profit/loss accounts.
- Records of salaries and wages.
- Records of fixed assets.
- All records of stock accounts related to inventory statements.
- Inventory records and statements of the end of any relevant tax periods.
If the person conducting the business fails to keep the required accounting records, a fine of AED 10,000 will be imposed for the first time. In the case of repetition, AED 50,000 will be levied.
Regulations Related to Keeping Books of Accounts Under Tax Laws
According to Cabinet Decisions 36 of 2017 on the executive register of Federal Law No (7) of 2017 on tax procedures. Every taxable person should be in their books of accounts for a period of 5 years after the end of the tax period. However, according to the VAT laws, businesses in the real estate sector are required to maintain records that must be kept for 15 years.
Regulations Related To Keeping Books of Accounts for Others
Every free zone in the UAE mandates the registered companies to keep books of accounts. This is to stay compliant with local and international regulations. However, some larger free zones mandate that the firms are needed to conduct an audit of the accounts.
How ebs Can Help?
ebs has an excellent track record of assisting companies. The United Arab Emirates (UAE) has a complex financial landscape, with a variety of laws and regulations governing businesses. It is important for businesses to understand these laws and regulations in order to comply and avoid penalties.
One of the most important aspects of financial compliance in the UAE is bookkeeping. Businesses must keep accurate and up-to-date records of their financial transactions. This includes records of income, expenses, assets, and liabilities.
ebs can help businesses with bookkeeping in a number of ways. First, ebs provides a secure and reliable way to store financial data. This data can be accessed from anywhere, making it easy for businesses to keep their records up to date.
Second, ebs offers a variety of features that can help businesses automate their bookkeeping. This can save businesses time and money.
Third, ebs integrates with a variety of accounting software, making it easy for businesses to import and export data. This can help businesses streamline their bookkeeping process.
In addition to bookkeeping, EBS can also help businesses with other aspects of financial compliance. For example, ebs can be used to store tax records and generate reports that can be used to comply with government regulations.
Here are some specific examples of how ebs can help businesses navigate the UAE’s financial landscape:
A construction company can use ebs to store its financial records, including invoices, receipts, and payroll data. This data can be easily accessed by the company’s accountants and auditors, making it easy to comply with accounting and auditing standards.
A retail store can use ebs to store its inventory data. This data can be used to track inventory levels and generate reports that can be used to comply with government regulations.
A restaurant can use ebs to store its customer data. This data can be used to track customer spending habits and generate reports that can be used to market to customers.
If you are a business operating in the UAE, it is important to understand the country’s financial landscape and to comply with all applicable laws and regulations. ebs can help you with this by providing a secure, reliable, and scalable way to store your financial data.