Accounting in the UAE, What Has to Be Right

That changes which parts have to be right. Here are the five that matter, and what each one costs you when it is wrong.

1. Your books must be in IFRS

Financial statements in the UAE are prepared under International Financial Reporting Standards. Corporate Tax starts from accounting income determined under those standards, then applies adjustments.

If your books are on a cash basis, or on a chart of accounts your last bookkeeper invented, you do not have a starting figure. You have a reconciliation exercise, and you pay someone to do it under deadline pressure.

2. Bank reconciliation is the whole game

Every other check depends on this one. An unreconciled bank account means your revenue figure is a guess, and your revenue figure decides whether you qualify for Small Business Relief at AED 3,000,000.

Reconcile monthly, not at year end. A year of unreconciled statements takes longer to fix than twelve months of doing it properly, and the errors compound.

3. Keep the document, not just the entry

An entry without support is not evidence. The FTA can ask, your auditor will ask, and "we posted it from the bank statement" is not an answer for a AED 40,000 expense.

Attach the invoice to the transaction as you post it. Every serious accounting system does this now. Doing it later means finding a supplier invoice from eighteen months ago, which usually means you do not find it.

4. Your VAT and your accounts must agree

Your VAT returns and your annual accounts are prepared from the same ledger, so revenue in one should tie to revenue in the other.

When they differ, one of them is wrong, and you have filed the wrong one with a federal authority. This is the single most common finding we see. Reconcile the four VAT returns to the annual revenue figure before you sign anything.

5. Fix the year end before the year ends

Accruals, prepayments, depreciation and provisions all move your taxable profit. So does the treatment of related party balances.

Deciding these in month 13, after the year has closed, means you are documenting a position rather than choosing one. Decide the policy early and apply it consistently.

What this costs when it goes wrong

Late reconciliation adds weeks to your audit and your audit fee rises with the mess.

A revenue figure that turns out to be over AED 3,000,000 removes Small Business Relief, and once exceeded you cannot elect for it again in a later period even if revenue falls back.

A VAT to accounts mismatch invites questions from the FTA about a return you already filed.

The short version

Reconcile monthly. Attach documents as you go. Tie VAT to your accounts before year end. None of this is difficult. It is only expensive when it is left.

If you want us to look at where your books actually stand, send us your trial balance and last bank statement.