Since the introduction of corporate tax and VAT, proper bookkeeping is no longer optional for UAE companies. Free zone businesses must maintain accurate records to qualify for the 0% tax exemption and comply with VAT regulations.
Legal Requirements
All UAE companies must: maintain proper accounting records for 5+ years, prepare annual financial statements, file corporate tax returns with FTA, file quarterly VAT returns (if registered), and undergo annual audit (required by most free zones, especially DMCC, JAFZA, DIFC, ADGM). Penalties for non-compliance: AED 10,000-50,000.
What You Need to Track
Income and expenses with proper invoices. VAT on all transactions (input and output). Bank reconciliations. Payroll records. Asset register. Intercompany transactions (if you have related entities). Foreign currency transactions with proper exchange rate documentation.
Software Options
Zoho Books: popular in UAE, VAT-compliant, from AED 40/month. Xero: good for international businesses, from AED 50/month. QuickBooks: widely used, from AED 50/month. Wafeq: UAE-built, Arabic/English, free plan available. FreshBooks: good for freelancers, from AED 30/month.
Outsourced Accounting Costs
Basic bookkeeping: AED 500-2,000/month. Full accounting + VAT filing: AED 1,500-5,000/month. Annual audit: AED 3,000-15,000 (depends on company size). Corporate tax filing: AED 1,000-5,000. Total annual: AED 10,000-50,000 for small businesses.
Frequently Asked Questions
Do free zone companies need an audit?
Most free zones require an annual audit by a UAE-licensed auditor. DMCC, JAFZA, DIFC, and ADGM have mandatory audit requirements. Some smaller zones (Shams, IFZA) don't require audits for micro businesses but it's recommended for corporate tax compliance.
When do I need to register for VAT?
Mandatory registration: if taxable supplies and imports exceed AED 375,000 in 12 months. Voluntary registration: if supplies exceed AED 187,500. Free zone companies must register if they have non-qualifying (mainland) income above the threshold.
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