What are the standards of business operations in the UAE?

business

accounting

taxes

In this article:

primary documentation

Invoice requirements

VAT registration

Tax reporting

The UAE has specific paperwork requirements, which are essential for every company to keep in mind in order to avoid being fined.

01

Requirements for the primary documentation

Accounting and record keeping are the responsibility of every company in the UAE. A company’s accounting records must contain:

Balance sheet and profit and loss, export and import statements.
Records of wages and salaries.
Records of fixed assets.
Inventory records and reports at the end of the respective tax periods.
All inventory records relating to inventory records.
Accounting for the tax payment.

The tax inspector may ask for more than the above documents during an inspection:

Complete detailed verification balance for each of the periods requested (indicating opening and closing balances).
A reconciliation of the checking balance and the VAT return.
A list of the categories of income received since incorporation and the VAT treatment applied.
Structure of the group of companies, including all branches and subsidiaries (if applicable).

02

Invoice requirements

The invoice must state the payment purpose. Should the invoice specify a due date, please note that VAT will still have to be paid when the invoice is issued and not when the money is received.

Know Your Customer

According to anti-money laundering law, it is necessary to identify the counterparty by requesting the following documents before making transactions with the counterparty:

EID or visa and proof of residence address — for a sole proprietor.
License, articles of association, personal documents of the holders of more than 25% of shares in the company — for a legal entity.

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03

What information should be requested from the counterparty in order to register VAT?

If you plan to receive a VAT number, you will need to provide documentation on your counterparties:

Certificate of incorporation and notarized company charter, company address, bank account details, income and expenditure for the next 30 days, whether and to what extent the company imports, exports, cooperates with the Gulf Union countries, details of customs duties.
From the person representing the company: copy of passport, ID, phone number, e-mail.
Should at least one of the directors or partners of the applicant company have been in business within the past 5 years with a company registered in the UAE, a copy of his passport, ID, license of that business must be provided.

As a reminder, it is compulsory to get a VAT number if the company’s turnover in the last 12 months has exceeded AED 375,000 (approx. USD 102,000) or will exceed it in the next 30 days.

04

Tax reporting software

A company’s accounting department should only use software that meets the requirements of the tax authority (FTA). It can be found in a special register.

Zoho software is highly recommended. It has wide integration capabilities, works seamlessly with Dropbox, Google Drive and other cloud storage services. Its mobile versions work on iOS, Android and even Windows Phone. Sales, purchase orders, invoicing, payments, bank transactions, VAT tracking can all be managed from the software. Another notable difference is the ability to give access to certain documents directly to clients, which eliminates the need for an accountant in the data chain.

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