Is it mandatory to maintain books of Accounts in the UAE?

March 4, 2024

In accordance with Federal Decree-Law No. 7 of 2017, all companies operating within the UAE are mandated to uphold comprehensive accounting records and commercial books spanning a minimum of five years. Non-compliance with this directive can lead to penalties commencing at AED 5,000.

It is obligatory for qualified accountants to meticulously maintain these accounting books, adhering not only to local statutes and regulations but also to International Financial Reporting Standards (IFRS). Alternatively, there is an option to outsource accounting and bookkeeping services to UAE-based firms, such as ATC group.

Given the impending alterations in Corporate Tax regulations, the imperative to uphold meticulously maintained accounts in alignment with international standards assumes even greater significance.

ATC Group offers adaptable bookkeeping solutions catering to diverse business requirements. Choosing the services of reputable accounting and bookkeeping firms facilitates a more concentrated focus on core company operations and overarching business objectives. Adherence to proper accounting practices, as stipulated by UAE regulations, not only ensures the precise recording of financial transactions but also aids in meeting cash flow demands, averting insolvency and bankruptcy risks, enabling strategic planning, and formulating budget forecasts that contribute to adept financial management.

UAE Federal Law: Guidelines for Accounting Records

The legal framework outlined in Federal Law No. 2 of 2015 mandates that companies maintain their accounting records in a manner that accurately reflects the company’s financial standing at any given juncture. Compliance verification is essential, and these records must enable partners or shareholders to effectively audit the company’s financial records. The ensuing requirements for upholding accounting records within the UAE, as guided by the aforementioned law, are expounded below.

Article 26: Stipulations for Accounting Records

Companies are required to uphold their accounting records at their principal office for a minimum of five years from the conclusion of the company’s financial year.

Electronic duplicates of documents and records may be maintained, provided they adhere to regulations delineated in Ministerial Decisions.

During the preparation of periodic and annual accounts, strict adherence to International Accounting Standards and Practices is imperative, ensuring a lucid and precise depiction of the company’s profits and losses.

Accountability for Financial Reporting

Pursuant to Article 87 of Federal Law No. 2 of 2015 concerning Commercial Companies, the manager of a company is tasked with preparing the annual budget, profit and loss account, and an annual report on the company’s financial position. This mandate includes offering recommendations on profit distribution to the General Assembly within three months of the fiscal year’s culmination.

Understanding the Concept of Accounting

Accounting involves the systematic monitoring of a company’s financial dealings, typically emphasizing evaluation and analysis rather than mere documentation. The accounting procedure encompasses the condensation, evaluation, and communication of these transactions to regulatory bodies, governing entities, and tax authorities. Although recordkeeping revolves around collecting and maintaining information, the bulk of accounting revolves around utilizing this data to make tangible choices or offer advisory insights.

Scroll to Top