In today’s fast-moving UAE business landscape, maintaining accurate accounting and bookkeeping records is not just a good business practice, it is a legal requirement under Federal Law and a key factor in business growth, compliance, and sustainability. Whether you operate a mainland company, free zone entity, or multinational branch, financial record-keeping is critical for avoiding penalties and ensuring long-term success.
What Is Accounting and Bookkeeping?
- Bookkeeping involves recording daily financial transactions such as sales, purchases, expenses, and payments.
- Accounting takes those records and interprets them to provide financial insights, prepare reports, calculate taxes, and assess profitability.
Both functions work together to help business owners make informed decisions, comply with UAE regulations, and optimize financial performance.
Legal Requirement Under UAE Law
Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
Under Article 56 record keeping, every taxable person in the UAE must maintain proper accounting records for a minimum of seven years from the end of the financial year.
UAE VAT Law – Federal Decree-Law No. 8 of 2017
Businesses that meet the VAT registration threshold are required to:
- Maintain accurate financial records
- Record VAT on sales and purchases
- Generate periodic returns and submit them to the Federal Tax Authority (FTA)
Failure to maintain proper books of accounts can result in administrative penalties and tax assessments by the FTA.
Article 348 of Federal Law No. 2 of 2015 the Commercial Companies Law
the Commercial Companies Law, pertains to the failure to maintain proper accounting records and mandates a fine of AED 50,000 to AED 500,000 for non-compliance. Companies are legally required to keep their books of accounts in a manner that complies with the law, and failing to do so is an offense subject to this penalty.
Why Accounting and Bookkeeping Are Necessary for Businesses
1. Legal Compliance with UAE Tax Regulations
Proper accounting ensures compliance with VAT, Corporate Tax, and Excise Tax regulations. The Federal Tax Authority requires documented proof of revenue, expenses, and tax calculations. Without accurate records, businesses face penalties or audits.
2. Avoidance of Fines and Penalties
Under UAE Cabinet Decision No. 75 of 2023, maintaining incomplete or inaccurate financial statements can lead to financial penalties starting from AED 10,000 and increasing with repeated violations.
3. Transparency and Control Over Business Finances
Accounting enables business owners to know exactly where their money is going, identify areas of loss, and plan cost-saving strategies.
4. Helps with Free Zone and Mainland Compliance
Free zone companies wishing to qualify for 0% corporate tax must maintain audited accounts and meet financial substance requirements. Mainland companies too are obligated to maintain books of accounts as per UAE Commercial Companies Law.
5. Supports Business Growth and Investor Confidence
Accurate financial statements are essential when:
- Applying for bank loans
- Attracting investors
- Expanding operations
- Selling or valuing the business
6. Enables Strategic Decision-Making
Accounting transforms raw data into actionable insights. Business owners can analyze profitability, cash flow, and return on investment to make data-driven decisions rather than relying on assumptions.
Why Outsourcing Accounting Is the Smart Choice
Many businesses in the UAE prefer to outsource to professional accounting firms instead of hiring in-house staff. Outsourcing is:
- Cost-effective (no salary or visa costs)
- Efficient and accurate
- Ensures compliance with UAE laws
- Provides expert tax planning and advisory
Why Choose Finexus?
- UAE-registered and certified professionals
- Real-time bookkeeping using cloud software
- VAT & Corporate Tax registration, filing, and advisory
- Monthly financial reporting with KPIs for better decision-making
- Affordable plans for startups, SMEs, and established businesses
Your Business Needs Accurate Accounting – Your Solution is Finexus.
Contact Finexus Advisory today and stay compliant with UAE laws while improving your financial performance.
