BOOKKEEPING NOW MANDATORY FOR EVERYONE IN UAE

BOOKKEEPING NOW MANDATORY FOR EVERYONE IN UAE

According to the Federal Decree-Law No. 28 of 2022, Cabinet Decision No. (74) of 2023, Federal Decree-Law No. (8) of 2017, Federal Decree-Law No. 47 of 2022, all UAE companies must maintain accounting record and commercial books for at least the past 5 years. Failure to comply can bring penalties

According to UAE Federal Law, Federal Decree-Law No. (8) of 2017 how should companies maintain their books of accounts?

FEDERAL DECREE-LAW NO. (8) OF 2017 (VAT) ARTICLE 78 ON RECORD-KEEPING

1. Without prejudice to the provisions related to record-keeping stated in any other law, the Taxable Person shall keep the following records:
   1. Records of all supplies and Imports of Goods and Services.
   2. All Tax Invoices and alternative documents related to receiving Goods or Services.
   3. All Tax Credit Notes and alternative documents received.
   4. All Tax Invoices and alternative documents issued.
   5. All Tax Credit Notes and alternative documents issued.
   6. Records of Goods and Services that have been disposed of or used for matters not related to Business, showing Taxes paid for the same.
   7. Records of Goods and Services purchased and for which the Input Tax was not deducted.
   8. Records of exported Goods and Services.
   9. Records of adjustments or corrections made to accounts or Tax Invoices.
   10. Records of any Taxable Supplies made or received in accordance with Clause (3) of Article 48 of this Decree-Law, including any declarations provided or received in respect of those Taxable Supplies. A Tax Record that includes the following information:
       1. Due Tax on Taxable Supplies.
       2. Due Tax on Taxable Supplies pursuant to the mechanism in Clause (1) of Article (48) of this Decree-Law.
       3. Due Tax after the error correction or adjustment.
       4. Recoverable Tax for supplies or Imports.
       5. Recoverable Tax after the error correction or adjustment.
2. The Executive Regulation of this Decree-Law shall specify the following:
   1. Time limits, restrictions, and conditions for keeping the records listed in Clause (1) of this Article.
   2. Restrictions and procedures regarding the maintenance of the confidentiality of the records that may be accessed by the Authority in the case of Government Entities mentioned under Clause (2) of Article (72) of this Decree-Law.
      
      
      

Companies should maintain their books of accounts at their head office for at least 5 years from the end of the financial year of the company.

Companies can keep an electronic copy of the documents and records kept in accordance with the regulations issued by a Ministerial Decision.

While preparing the periodical and annual accounts, companies need to ensure that they comply with the International Accounting Standards and Practices to give a clear and accurate view of the profits and losses of the company.

FEDERAL DECREE-LAW NO. 47 OF 2022

Article 56: Record Keeping

Business record-keeping forms a vital component of an effective taxation regime by providing the Authority access to relevant information to assess whether a Person has complied with its necessary Corporate Tax obligations.

This Article sets out the record-keeping obligations of a Taxable Person under the Corporate Tax Law.

Where applicable, businesses are required to keep records such as:

● a cash book recording daily sales, including credit sales.

● a salary and wages register if the business has employees;

● related records that support the information provided in the Tax Return or other documents filed with the Authority; and

● any other records that will allow the Taxable Income to be calculated.

Clause 1 obliges a Taxable Person to keep all documents and records that support the information provided in the Tax Return or any other document filed with the Authority, and that enable the Taxable Income of the Taxable Person to be readily ascertained by the Authority. Clause 1 further requires these records and documents to be maintained for seven years following the end of the relevant Tax Period to which they relate.

Clause 2 requires an Exempt Person to keep any information, accounts, documents and records to enable the Exempt Person’s status to be readily ascertained by the Authority. Similar to a Taxable Person, an Exempt Person should also keep such records for seven years following the end of the Tax Period to which they relate.

Cabinet Decision No. (75) of 2023 On the Administrative Penalties for Violations Related to the Application of Federal DecreeLaw No. (47) of 2022 on the Taxation of Corporations and Businesses

The Cabinet:

– Having reviewed the Constitution,

– Federal Law No. (1) of 1972 on the Competences of the Ministries and Powers of the Ministers, and its amendments,

– Federal Decree-Law No. (13) of 2016 on the Establishment of the Federal Tax Authority, and its amendments,

– Federal Law No. (14) of 2016 on Violations and Administrative Penalties in the Federal Government,

– Federal Decree-Law No. (28) of 2022 on Tax Procedures, – Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses,

– Cabinet Decision No. (40) of 2017 on the Administrative Penalties for Violation of Tax Laws in the UAE, and its amendments,

– Pursuant to what was presented by the Minister of Finance and approved by the Cabinet,

Failure of the Person conducting a Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to keep the required records and other information specified in the Tax Procedures Law and the Corporate Tax Law.	One of the following penalties shall apply: 1. 10,000 for each violation. 2. 20,000 in each case of repeated violation within 24 months from the date of the last violation.
Failure of the Person conducting Business or Business Activity or having a Tax obligation under the Tax Procedures Law or the Corporate Tax Law to submit the data, records and documents related to Tax in Arabic to the Authority when requested.	5,000

Cabinet Decision No. (74) of 2023 On the Executive Regulation of Federal Decree-Law No. (28) of 2022 on Tax Procedures

ARTICLE (2)- KEEPING RECORDS

Accounting records and commercial books shall include the following:

1. Records and books in relation to Business, which evidence or in which payments and receipts, purchases and sales, revenues and expenditures are recorded, as well as any matters as may be required under the Tax Law or any other applicable law, including but not limited to:
   1. Balance sheet and profit and loss accounts.
   2. Records of wages and salaries.
   3. Records of fixed assets.
   4. Inventory records and statements (including quantities and values) at the end of any relevant Tax Period and records of stock counts related to inventory statements.
2. All documents supporting the entries in the accounting records and commercial books, including but not limited to:
   1. Correspondence, invoices, licences and contracts related to the Business.
   2. Documents containing details of any election, assessment, determination or calculation made by a Taxpayer in relation to the Tax affairs of its Business, including the basis, or method of assessment, determination or calculation made.

In addition to the accounting records and commercial books referred to in Clause (1) of this Article, the Authority may request any other information in order to verify, through a series of auditable documents, the Person’s Tax obligations, including their responsibility to register for Tax purposes’.

ARTICLE (3) PERIOD OF RECORD KEEPING

1. All accounting records, commercial books and information shall be retained and maintained in a way that enables the Authority or any employee authorised by it to verify the Tax obligations imposed on the Person concerned for the following periods, unless the Tax Law states otherwise:
   1. A period of (5) five years following the Tax Period to which they relate in respect of a Taxable Person.
   2. A period of (5) five years from the end of the calendar year in which the concerned document was created in respect of all Persons other than Taxable Persons.
   3. A period of (7) seven years from the end of the calendar year in which the concerned document was created for real estate records.
2. In addition to the periods specified in Clause (1) of this Article, the Person shall retain the books and records for the following additional periods, in the following cases:
   1. For an additional period of (4) four years or until the dispute is finally settled, whichever is later in case of dispute between the Person and the Authority in respect of the Person’s Tax obligations.
   2. For an additional period of (4) four years in case the Person is subject to an ongoing Tax Audit.
   3. For an additional period of (4) four years in case the Authority notified the Person of its intention to conduct a Tax Audit prior to the expiry of the period set out in Clause (1) of this Article.
   4. For an additional period of (1) one year starting from the date of submission of a Voluntary Disclosure in respect of the Taxable Person that submits a Voluntary Disclosure in the fifth year from the end of the relevant Tax Period.
3. Subject to Clauses (1) and (2) of this Article, the Legal Representative shall retain the books and records of the Person he is representing for a period of (1) one year from the date on which such legal representation expires.

Article (4) Method of Keeping Accounting Records and Commercial Books

1. The obligation to keep accounting records and commercial books shall be met by either:
   1. Creating a record and retaining the original documents which support the entries contained in the record.
   2. Creating a record and retaining the information contained in the original documents, provided that the following is met:
      1. The information contained in the record is identical to the data contained in the original document and shall be available during the periods referred to in Article (3) of this Decision.
      2. The information is retained or stored in either photocopy or electronic copy, and an easily readable copy of which can be reproduced, if requested by the Authority, within the period as specified by the Authority in accordance with the provisions Article (48) of the Decree Law.
      3. The information is retained or stored in a manner that enables the Authority to verify the Person’s Tax obligations.
2. The Authority may specify the rules for maintaining the information contained in accounting records and commercial books and impose reasonable requirements for ensuring that the information will be available as if the original records themselves had been preserved.