Tax rules relaxed, penalties reduced in the UAE The cabinet also approved the issuance of a decision regarding the requirements of the Natural Person Insolvency
Is Bookkeeping Mandatory for Companies in the UAE
Bookkeeping is the ongoing recording of the financial transactions conducted by a business or other organisation. This includes purchases and sales and all forms of expenditure and income.
Traditionally, these records were kept in physical books called account books, hence the name bookkeeping. Some businesses still use this method.
But with the advent and growth of computer technology, software, databases and remote data storage facilities, financial records have increasingly been kept in time-saving and convenient digital media formats.
Whether your financial records are kept in hard copy books or in electronic data form, there is a limited number of standard systems governing the manner in which they are organised and presented.
In practice, one of two systems is generally adhered to. These are known as single-entry bookkeeping and double-entry bookkeeping.
The simpler and quicker bookkeeping system to operate and maintain, this essentially involves a running chronological record of receipts and payments made.
Single-entry bookkeeping is ideally suited to sole traders and other small businesses for whom double-entry bookkeeping would be too complex and time-consuming to be justified for the additional information it provides.
In this system, the financial transactions and assets of a business are distributed among numerous accounts, each of which may be represented by a name or numeric code. For every transaction recorded, a credit to one account is matched with a debit of the same amount to another. Thus, every transaction is recorded in two accounts i.e. double-entry.
The advantages of this system are chiefly twofold. Firstly, by breaking down the affairs of the company into many accounts, it provides a basis for detailed and precise aggregated management information and controls. Secondly, the balancing of credit and debit across two accounts for every transaction allows for controls to be conducted to identify errors.
Training in double-entry bookkeeping is needed to understand which accounts to debit and which to credit for each type of transaction – this is a job that business owners do not often find straight-forward, or cost-effective to undertake themselves. Those choosing to use double-entry bookkeeping often prefer to outsource the job to dedicated professionals.
Double-entry bookkeeping is a tried and tested system. It has been in widespread use on the European continent since the Middle Ages, and was popularised in England in the mid 1550s. It’s now a standard around the world.
Bookkeeping and the law in the UAE
Maintenance of books of accounts and necessary supporting and relevant records are highly essential requirements for proper management and control of the business operations. This will facilitate the correct receipt and payment of cash and other transactions entered by the company. It is mandatory to maintain the books of accounts under UAE company law and VAT law. Hence accounts maintenance in Dubai and all other emirates in UAE is compulsory.
Under Federal Law No. (2) of 2015 Commercial Companies in the United Arab Emirates ( UAE)
- Each company shall maintain proper accounting records showing its transactions and should disclose at any time the accurate financial position of the company. The Partners or shareholders should confirm that the books of accounts of the company are kept as per the provisions of this Law.
- Each company shall maintain its accounting books/records in its head office for a period of at least 5 (five) years from the end of the financial year of the company.
- The company may maintain an electronic copy of the original of the documents and records kept and deposited therein in accordance with the controls issued by a Ministerial Decision.
Account Records-Under UAE VAT Law (as per clarifications given for Draft Law).
It is mandatory for every taxable person to maintain books of accounts under UAE VAT law. In addition to that the authority can ask for additional documents such as, annual accounts, general ledger, purchase day book, invoices issued, invoices received, credit notes, debit notes, VAT Ledger etc.
Under the UAE VAT law the books of accounts and records are to be maintained for five years.
Registration for non-financial entities, individuals for Anti Money Laundering in the UAE extended until April 30
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