Top 4 Principles of Effective Accounting in the UAE

Over the past few years, the UAE has transformed from a country with relaxed accounting requirements and lax reporting rules into a traditional, and therefore, fairly regulated, system. Fundamental changes to the country's laws, such as the introduction of corporate tax and mandatory IFRS reporting requirements, have, while making business in the UAE more transparent, simultaneously complicated business processes.

Until recently, many companies, operating without significant accounting burdens, are now making numerous mistakes: filing reports late, using the wrong accounting method, or failing to report their cryptocurrency transactions at all. For over three years, the international law firm Antwort Law has been helping entrepreneurs in the UAE conduct their businesses transparently, legally, and profitably. In this article, we will explain how to organize accounting and tax compliance in the UAE effectively, avoiding fines, disagreements with auditors, and blocked bank accounts.

1) To ensure smooth filing of all required reports in the UAE, companies must carefully collect various types of documents. Missing key documents can cause problems with banks and the UAE Federal Tax Authority (FTA). We recommend carefully compiling the following documents:

1. Bank statements for all corporate accounts;
2. Reports from cryptocurrency exchanges and fintech platforms (Binance, Bybit, Stripe, etc.);
3. Contracts and source documents (invoices, certificates, agreements);
4. Payroll data (including WPS reports for mainland companies);
5. VAT reports (sales and purchase journals, adjustments);
6. Corporate tax documents (declarations, calculation work files, deduction confirmations);
7. ESR and transfer pricing reports (for holding companies).

2) Many also face the inevitable question of which accounting method is preferable: cash or accrual. The answer, as often happens, depends on the company itself. For example, if your business has a small turnover and is not required to undergo mandatory audit procedures, then the cash method, where income and expenses are recognized based on actual cash flow, is a better solution than the accrual method. The accrual method, however, complies with IFRS* and is used by companies subject to mandatory corporate tax and audit, which constitutes the majority of companies. With this accounting method, revenue is recognized when a product or service is sold, without reference to actual cash flow.

*IFRS (IRFS) are international financial reporting standards that regulate the preparation and filing of financial statements worldwide.

3) Choosing the right specialized accounting software is also important, as manual accounting is much more prone to errors. Customizing the software to suit your needs is also crucial. We recommend the following programs based on the size of your company and the number and complexity of its transactions:

• If you have a small or medium-sized business, the cloud-based Zoho Books solution will be sufficient. It's inexpensive and easy to use, making it ideal for companies just starting out.
• If you handle international transactions and complex payment logistics, you'll need more advanced solutions, such as Xero and QuickBooks. These offer more comprehensive and complex functionality at a higher price.
• If your business requires a large volume of document flow, the best solution is the UAE-adapted 1C UAE Edition.
• If you maintain digital records and work with digital assets, consider integration with crypto exchanges.

4) Adherence to the tax reporting calendar is also a key factor in successful bookkeeping in any country, and the UAE is no exception. Missed filings can result in significant fines.

• Annual financial statements according to IFRS
• Auditor's report (for most free zones and all mainland companies)
• VAT returns — quarterly
• Corporate tax returns
• ESR reports and notifications

Banks and auditors demand a perfectly structured system, and achieving this is extremely difficult without professional support. Antwort Law provides comprehensive legal, tax, and banking services for companies in the UAE, including helping to establish a streamlined, turnkey accounting system:

• we analyze the business model and operations,
• configure accounting systems and integrate with banks and exchanges,
• develop accounting policies in accordance with IFRS and the requirements of the selected free zone,
• prepare and submit financial statements to the FTA,
• support audits and tax audits.

Over three years of work in Dubai, we've helped dozens of companies—from startups to international holdings—build an accounting system that's accepted by both auditors and banks, if you want to avoid fines, disputes with banks, and endless accounting revisions.

If you want to avoid fines, disputes with banks, and endless accounting revisions, schedule a consultation with Antwort Law. We will conduct an express audit of your current accounting system, identify weaknesses, and prepare an action plan that will ensure your company is fully compliant with FTA requirements.

Lidia Ivanova

International lawyer
Antwort Law