Books of Accounts under VAT in Dubai
Books of accounts under VAT in Dubai is a core duty for every company. The UAE introduced VAT on 1 January 2018 at a 5% rate. The state uses the tax for public services and growth. A registered seller charges VAT to customers. The seller pays the net VAT to the government on a monthly or quarterly cycle.
A company must register when taxable supplies and imports cross AED 375,000. A company may register voluntarily when supplies or expenses cross AED 187,500. A startup may also register when expenses cross the voluntary bar. Good records support every VAT return from the first day.
Mandate on Accounting Records and Books
The VAT law tells a business to document income, costs, assets, and VAT. The files must be accurate and up to date. Even a non-registered entity must keep records. The Authority may check the base documents at any time.
Core accounting books include:
- Records of payments and receipts
- Purchases and sales ledgers
- Revenue and expense summaries
- Balance sheet and profit and loss accounts
- Wages and salaries records
- Fixed asset register
- Inventory records, counts, and valuation notes
The Authority may also ask for other data to confirm a duty to register or to confirm a tax position.
Record-Keeping Rules and Formats
Article (78) sets clear lists for VAT compliance. A taxable person keeps:
- Records of all supplies and imports of goods and services
- All tax invoices and any alternate documents received
- All tax credit notes and any alternate documents received
- All tax invoices and credit notes that the business issues
- Records of goods or services used for non-business matters, with the VAT shown
- Records of purchases where input VAT isn’t deducted
- Records of exports
- Records of adjustments or corrections to accounts or invoices
- RCM (reverse charge) declarations and related entries
- A tax record that shows due tax, corrections, and recoverable tax
Acceptable storage:
A firm keeps original documents. If not, the firm keeps clear copies in paper or electronic form. The firm stores data in a way that lets the Authority check obligations within a reasonable time.
Retention Time Frames
A taxable person keeps accounting records for 5 years after the end of the tax period. A non-taxable person keeps records for 5 years from the year-end of the document.
Capital assets files stay for 10 years. Real estate records stay for 15 years after the related tax period. The Authority may extend these limits in special cases.
Practical VAT Responsibilities for Owners
A registered company must:
- Issue tax invoices with all required fields
- Charge VAT on taxable supplies and track the totals
- Claim input VAT on eligible business costs
- File VAT returns online by the due date
- Pay any net VAT on time
- Keep ledgers, contracts, and shipping proofs in order
If output VAT is higher, the firm pays the difference. If input VAT is higher, the firm seeks a refund.
Penalties for Poor Records or Late Actions
Non-compliance can hurt a company. Fines apply to late filings, missing invoices, poor records, and wrong prices. For example, fines can reach AED 10,000 for failure to keep required records at first instance and AED 50,000 for repetition. A fine of AED 20,000 applies when a person fails to submit tax data in Arabic when requested. Strong controls help you avoid losses and stress.
Why Outsourced Bookkeeping Helps Owners
Owners want growth with less risk. Outsourcing books can give fast wins at a fair cost.
Key benefits:
- It improves efficiency and streamlines processes
- It reduces overhead and training cost
- It lets leaders focus on core activities
- It adds secure systems and confidentiality
- It offers on-call experts with extra services
- It keeps records ready for audits and reviews
Outsourcing works well for SMEs that need reliable cycles with limited staff.
Importance of Accounting & Bookkeeping in Dubai
The Commercial Companies Law and the VAT Law require proper books for at least five years. Clean books help you budget and plan. Clean books also support tax returns every year. Leaders use books to analyze performance and make decisions. Investors ask for timely reports and clear trends. Proper bookkeeping tracks profit, growth, and cash flow.
Good practice checklist:
- Close books monthly with bank reconciliations
- Match sales and purchases with invoices and receipts
- Track VAT on each line with correct tax codes
- Separate zero-rated, exempt, and standard-rated items
- Keep payroll, fixed assets, and inventory registers current
- Review each VAT return before filing
What Can Help 🥇
Mubarak Al Ketbi (MAK) Auditing helps your team set simple VAT processes and clean books. Our experts create chart-of-accounts with VAT codes. Our team trains staff and reviews returns before filing. We guide you through retention rules and audit steps. We keep your business compliant and calm. Remember, a stitch in time saves nine, because early controls stop big trouble later.
- For more information visit our office:
Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates - Contact/WhatsApp: +971 50 276 2132
