Accounting Standards in UAE
Key factors responsible for the UAE’s high ranking is that it has no corporation tax, no personal tax, and no limits on repatriation of capital or profits. This greatly reduces the complexity of accounting in UAE.
These are the main UAE accounting laws which set the accounting standards to be followed:
It is mandatory to maintain the books of accounts under UAE company law and VAT law. Under Federal Law No. (2) of 2015 Commercial Companies in the United Arab Emirates ( UAE) Article 26 each company shall maintain proper accounting records showing its transactions and should disclose at any time the accurate financial position of the company. Under Federal Law No. (7) of 2017 on Tax Procedures Article 4, any person conducting any business shall keep accounting records. In the case of a Taxable Person (for VAT purposes) these need to be kept for a period of (5) years after the end of the tax period to which they relate.
The applicable UAE accounting standards are the International Financial Reporting Standards (IFRS). In 2015 a new UAE Commercial Companies Law, UAE Federal Law No. 2 of 2015, came into force. The law requires all companies with public accountability to use full IFRS as issued by the IASB. In addition, the new law permits small and medium-sized entities to use either the IFRS for SMEs or full IFRS.
The UAE Commercial Companies Law requires the audit of all companies registered in the mainland (ie outside the freezones). Article 238 of the law requires the profit and loss statement and balance sheet to be published in two newspapers. Freezones authorities maintain their own company law. All freezone authorities require the preparation of audited accounts and most also require submission of these accounts to the freezone authority.