In UAE, according to the Federal Law No 2 of 2015 on Commercial Companies and the UAE VAT law and relevant free zone laws, it is mandatory for the companies to maintain the books of accounts for at least 5 years. Maintaining proper books of accounts is compulsory in the UAE and any violations will have to bear administrative penalties.
Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) are two of the most frequently used bookkeeping principles in UAE. UAE has no GAAP of their own. In 2015, new regulations were imposed by “The UAE Commercial Companies Law” which the Securities and Commodities Authority (SCA) has made it mandatory for the businesses to comply with IFRS as stipulated by the Central bank of the UAE. So, all the companies listed in the NASDAQ Dubai, Dubai Financial Market (DFM), or Abu Dhabi Securities Exchange (ADX) is required to manage their accounting records in accordance with International Financial Reporting Standards (IFRS). Businesses which are not listed in above exchanges are also encouraged to follow and implement IFRS. Private companies must follow international accounting rules if they are formed based on “The UAE Commercial Companies Law”.
Businesses in UAE need to have qualified accountants to maintain their books of accountants in compliance with local laws & regulations and as per International Financial Reporting Standards (IFRS).
(Read more: Why should you outsource your accounting needs?)
Maintaining Books of Accounts as per UAE Federal Law
In the UAE, companies are required to keep accounting records showing transactions to accurately reveal at any time the financial position of the company. The following Articles of the Federal Law No 2 of 2015 lists the requirements to maintain books of accounts in UAE
Article 26 on Accounting Records
- Companies should maintain their books of accounts at its head office for at least 5 years from the end of the financial year of the company.
- The 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.
Responsibility of Preparing the Accounts
According to Article 87 of the Federal Law, No 2 of 2015 on Commercial Companies, the manager of a company is required to prepare the annual budget and the profit and loss account. The manager is also required to compile an annual report on the financial position of the company and provide recommendations on the distributions of the profits of the General Assembly, within 3 months from the end of the financial year.
In UAE, according to the Federal Law No 2 of 2015 on Commercial Companies and the UAE VAT law and relevant free zone laws, it is mandatory for the companies to maintain the books of accounts for at least 5 years. Maintaining proper books of accounts is compulsory in the UAE and any violations will have to bear administrative penalties.
Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) are two of the most frequently used bookkeeping principles in UAE. UAE has no GAAP of their own. In 2015, new regulations were imposed by “The UAE Commercial Companies Law” which the Securities and Commodities Authority (SCA) has made it mandatory for the businesses to comply with IFRS as stipulated by the Central bank of the UAE. So, all the companies listed in the NASDAQ Dubai, Dubai Financial Market (DFM), or Abu Dhabi Securities Exchange (ADX) is required to manage their accounting records in accordance with International Financial Reporting Standards (IFRS). Businesses which are not listed in above exchanges are also encouraged to follow and implement IFRS. Private companies must follow international accounting rules if they are formed based on “The UAE Commercial Companies Law”. Businesses in UAE need to have qualified accountants to maintain their books of accountants in compliance with local laws & regulations and as per International Financial Reporting Standards (IFRS).
Maintaining Books of Accounts as per UAE Federal Law
In the UAE, companies are required to keep accounting records showing transactions to accurately reveal at any time the financial position of the company. The following Articles of the Federal Law No 2 of 2015 lists the requirements to maintain books of accounts in UAE
Article 26 on Accounting Records
- Companies should maintain their books of accounts at its head office for at least 5 years from the end of the financial year of the company.
- The 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.
Responsibility of Preparing the Accounts
According to Article 87 of the Federal Law, No 2 of 2015 on Commercial Companies, the manager of a company is required to prepare the annual budget and the profit and loss account. The manager is also required to compile an annual report on the financial position of the company and provide recommendations on the distributions of the profits of the General Assembly, within 3 months from the end of the financial year.