Dubai Accounting - What to know

Dubai accounting has become a very high profile topic over the last six months for entrepreneurs with interests in Dubai. A company formation in dubai has also offered administrative benefits in addition to tax advantages for many years. This ended first with the introduction of VAT in 2018 and then with the introduction of the new corporate tax in 2023. This was brought about by international pressure on the one hand, and on the other by the UAE's clear ambition to become a major business hub. Private individuals do not have to pay tax, so they do not have to file a tax return.

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United Arab Emirates VAT (Value Added Tax) introduction

The Government of the United Arab Emirates introduced a Value Added Tax (VAT) on 1 January 2018. VAT 5% in the country, which is charged for all local services and goods. We have written a detailed article on VAT in the United Arab Emirates in order to explain the rules as clearly as possible.

What should a Dubai company owner know about VAT in 2024?

The company whose taxable amount (VAT) revenue exceeds In 12 months, the 375.000 AED, register at must be yourself in the tax office and you must submit a quarterly VAT return, even if no VAT liability has arisen. To do this, we need to find an accountant to keep our Dubai accounts in order.

When should VAT be charged on products and services?

All sales of goods or services made in the UAE are subject to 5% VAT. Exceptions to this rule are sales between Freezone companies, sales abroad, or where a Freezone or mainland company has not yet reached the AED 375,000 turnover threshold. It is important to distinguish, however, between a business that is not yet VAT registered and a business that may have sold a product that is exempt from VAT or a business that has sold abroad and therefore cannot charge VAT.

Dubai accounting - introduction of corporate tax

The possibility of a corporate tax in the United Arab Emirates was created by the new Federal Law No. 47/2022, adopted on 3 October 2022.With effect from 1 June 2023, the corporate tax was introduced from the next financial year, which for most companies is 1 January 2024, Dubai taxation see our article on.

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What does a business owner need to know about Dubai accounting?

All companies and businesses registered in the Emirates are required to register with the local tax office (FTA - Federal Fax Authority). This is usually done by the accountant of the Dubai company. We recommend that it be done by the accountant who will then keep the company's accounts.

About the products and services the company sells they must issue an invoice, a cost and can account for, of which a financial statement be prepared and the within 9 months of the end of the financial year the prepared report from to the tax office submit.

Businesses must have accurate, up-to-date records. You must keep your financial records for 7 years, to present at a possible inspection.

What kind of invoice does a Dubai company issue?

The laws of the United Arab Emirates do not specify how the invoice is issued. It can be issued in Excel or any other document editing program or invoicing software. The UAE Tax Authority, the FTA by an approved biller programme for example Zoho invoicing and accounting software. You should always discuss this with the accountant who will be doing the accounting for your company.

What are the contents of an official account in the United Arab Emirates?

There are billing software that fully comply with the FTA rules, and we recommend the use of such billing software. However, some of our clients only issue a few invoices a year and do not think it is necessary to use a billing software. In the case of invoices produced in an invoicing software, it is also mandatory to comply with the mandatory content elements required by the FTA. 

An FTA (Federal Tax Authority) approved invoice must contain the following mandatory elements:

• the words "TAX INVOICE" clearly printed on the invoice
• the Seller's name, address and TRN (Tax Registration Number), if applicable.
• the name, address and TRN of the Buyer, if any
• a numbered or unique account number that identifies the account
• exhibition date
• date of performance, if different from the date of invoicing
• the name of the service or product provided
• unit price, quantity, VAT rate payable and amount payable in AED per unit
• possible discount
• Total amount in AED
• Amount of tax payable in AED, VAT rate
• If the Buyer is obliged to declare VAT, this must be clearly indicated, together with the relevant legal reference.

There is a simplified invoice, which can be used if the Buyer not VAT registered Company or VAT registered, however, the the total amount does not exceed AED 10,000. 

The simplified invoice must contain the following elements:

• the words "TAX INVOICE" clearly printed on the invoice
• the Seller's name, address and TRN (Tax Registration Number), if applicable.
• exhibition date
• the name of the service or product provided
• Total amount payable and VAT charged

Accounting for Dubai company

We have worked with many accounting firms in the Emirates over the last 5-6 years. For our clients, we have recommended our own partners who also do the accounting for our own companies. However, there have been regular occasions when tax issues have required consultation between the business owner and the accountant. We often found ourselves in the role of interpreter due to the English language difficulties of Hungarian clients. 

So the time has come to expand our team, and we now have a single source to help our clients with company formation, visa administration and accounting at the same time. 

Summary - Dubai Accounting

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Is it still worth starting a business in Dubai? Are the new conditions too onerous for those wishing to do business in the United Arab Emirates? It is difficult to give a simple answer to these questions, as each case is different and each motivation is different. Accountancy is now required in every country in the world, so even if you were to do business elsewhere, you would have such an obligation. In our opinion for tax purposes still outstanding in Dubai, and from a Hungarian perspective Great on the avoidance of double taxation Convention was signed between Hungary and the Government of the United Arab Emirates in 2015. All in all, many entrepreneurs will find it worthwhile to start a business and obtain a visa in Dubai. In this article, we summarise what you need to know about accounting for Dubai companies. Tax and VAT are covered in a separate article. Everywhere, but even more so in Dubai we recommend, that our accounts are always up to date. If you have any questions or if we can help, we are at your disposal. 

Source : https://tax.gov.ae/en/faq.aspx