UAE free zone companies are required to maintain financial records and most are required to produce audited financial statements annually. This guide covers how to set up accounting and bookkeeping for your UAE company.
UAE Accounting Requirements
UAE Federal Decree-Law No. 32 of 2021 (Companies Law) requires all UAE companies to: maintain proper accounting records for at least 5 years, prepare annual financial statements, and have financial statements audited by a registered UAE auditor (for most free zone companies). The UAE Federal Tax Authority (FTA) also requires tax records to be maintained for 7 years for CT and VAT purposes.
Step 1: Choose an Accounting Standard
UAE companies use International Financial Reporting Standards (IFRS). Some free zones allow IFRS for SMEs for smaller companies. Confirm the applicable standard with your free zone authority and auditor.
Step 2: Set Up Accounting Software
Recommended accounting software for UAE SMEs: QuickBooks Online (most popular in UAE, good MOHRE/WPS integration), Xero (popular with professional services companies), Zoho Books (affordable, good for VAT-registered businesses), and Tally (popular with Indian-owned businesses). Most software supports UAE VAT and corporate tax reporting.
Step 3: Open a Separate Business Bank Account
Keep business and personal finances completely separate. All company income and expenses must flow through the business bank account. Never use personal accounts for business transactions — this is a red flag for auditors and tax authorities.
Step 4: Engage a UAE-Registered Auditor
Most UAE free zones require annual audited financial statements. Only auditors registered with the UAE Ministry of Economy can sign statutory audit reports. The Big Four (Deloitte, PwC, EY, KPMG) are available in the UAE but expensive for SMEs. Mid-tier firms (Crowe, BDO, Grant Thornton UAE) offer good value for SME audits at AED 5,000–15,000/year.
Step 5: Register for UAE VAT (if applicable)
If your annual taxable turnover exceeds AED 375,000, register for UAE VAT with the FTA. VAT registration is also mandatory for new businesses expecting to exceed the threshold within 30 days. VAT returns are filed quarterly (or monthly for large taxpayers) through the EmaraTax portal.