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Accounting in the UAE.

Overview & essential requirements for UAE businesses
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Accounting in the UAE

Accounting plays an important role in not only ensuring compliance with regulatory frameworks but also in enhancing transparency and accountability within organisations. By accurately recording, analysing and interpreting financial data, accounting allows stakeholders to assess the performance of a business, make informed strategic decisions and effectively allocate resources.

This article aims to provide an introductory overview of accounting in the UAE, focusing on key aspects such as accounting standards, financial year-end and accounting compliance requirements.

Key takeaways

  • Companies in the UAE must follow the International Financial Reporting Standards (IFRS) when preparing their financial statements.
  • Businesses in the UAE have flexibility in determining their financial year-end.
  • Companies are required to prepare annual financial statements, including a balance sheet, income statement and cash flow statement.
  • While not mandatory for every company, many are subject to an annual audit conducted by independent auditors to assure stakeholders of the accuracy and reliability of financial statements.

Accounting standards in the UAE

According to Article 237 on Accounting Standards and Principles of the Federal Law No. (2) of 2015 on Commercial Companies, companies must follow international accounting standards and principles when preparing interim or annual accounts and determining distributable profits. These standards are referred to as International Financial Reporting Standards (IFRS).

The application of IFRS extends beyond just presenting financial information. It also influences how companies calculate their distributable profits, which refers to the portion of profits available to be paid out to shareholders as dividends.

There are several advantages to adhering to IFRS. Firstly, it promotes consistency in financial reporting across companies. This consistency allows for easier comparison of a company’s financial performance to that of its competitors. Secondly, IFRS emphasises transparency in financial disclosures. By requiring clear and open reporting, IFRS allows users of financial statements, such as investors and creditors, to gain a better understanding of a company’s financial health. Finally, IFRS facilitates comparability between companies operating in different countries. Since they all follow the same accounting standards, it becomes easier for international investors to compare investment opportunities across borders.

Determining the fiscal year and financial year-end in the UAE

Fiscal year

In accordance with Article 28 of the Federal Law No. (2) of 2015 on Commercial Companies, the fiscal year must meet the following requirements:

  1. Each company must establish a fiscal year as outlined in its Memorandum of Association (MOA). The first fiscal year may range from six to 18 months, starting from the company’s registration date in the commercial register with the competent authority.
  2. The following fiscal years will be considered consecutive periods of 12 months, beginning immediately after the expiration of the previous fiscal year.

Financial year-end

In the UAE, companies have flexibility in determining their financial year-end, although some common practices and regulations apply:

  • Calendar year: Many companies in the UAE choose to align their financial year-end with the calendar year, ending on 31 December.
  • Fiscal year: Some companies opt for a fiscal year-end that does not coincide with the calendar year. Industry standards, business cycles or regulatory requirements may influence this choice.

Essential accounting requirements for UAE companies

In the UAE, businesses are subject to various accounting compliances to ensure transparency, accuracy and accountability:


Bookkeeping involves recording financial transactions, including purchases, sales, receipts and payments. In the UAE, businesses must maintain accurate and up-to-date accounting records to comply with regulatory standards.

Qualified accountants are tasked with maintaining these accounting books in accordance with local laws, regulations and the IFRS.

Outlined below are the requirements for maintaining books of accounts in the UAE, as per Federal Law No. 2 of 2015, Article 26 on Accounting Records:

  • Companies must preserve their books of accounts at their head office for a minimum of five years from the end of the fiscal year.
  • Companies can maintain an electronic copy of documents and records, provided they adhere to regulations issued by the Ministerial Decision.
  • Each company must maintain accounting records showing its transactions. These records should accurately demonstrate the company’s financial standing, allowing partners and shareholders to verify that the company’s accounts are maintained per the provisions of the law.

Adhering to these requirements ensures legal compliance, promotes transparency and creates trust among stakeholders, contributing to the overall integrity of the business environment in the UAE.

Annual financial statements

Companies in the UAE are required to prepare annual financial statements at the end of each financial year. These financial statements typically include:

  • Balance sheet: A snapshot of a company’s financial position at a specific time, showing its assets, liabilities and equity.
  • Income statement: This summarises a company’s revenues, expenses and net income or loss for a specified period, such as the financial year.
  • Cash flow statement: This statement tracks the cash flow into and out of a company during a specific period and shows its operating, investing and financing activities.

Annual audit

Many companies are subject to an annual audit performed by independent auditors to provide stakeholders with assurance regarding the accuracy and reliability of their financial statements. Although audits are not required for every company, certain regulations and criteria specify whether an audit is compulsory.

Auditing requirements are outlined below:

  • Commercial Companies Federal Law: According to the Commercial Companies Federal Law, No. 32 of 2021, Chapter 2, Article 27, every joint stock company or limited liability company operating in the mainland must appoint one or more auditors to audit the company’s accounts annually. These companies must adhere to international accounting standards and practices when preparing their periodic and annual accounts.
  • Audit for trade licence renewal: Companies registered in many free zones with a free zone trade licence must submit audited annual financial statements for licence renewal.
  • UAE corporate tax law: According to Ministerial Decision No. 82/2023, companies categorised as taxable persons (entities subject to corporate tax) generating revenue exceeding AED 50 million during the relevant tax period and all qualifying free zone persons (a free zone person meeting all the conditions of the free zone corporate tax regime) must prepare and maintain audited financial statements.
  • Foreign companies: Foreign companies registered in the UAE must submit audit reports and audited financial statements for their branches as a mandatory requirement every year.


The accounting standards framework in the UAE, governed by Federal Law No. (2) of 2015 on Commercial Companies and aligned with International Financial Reporting Standards (IFRS), establishes clear guidelines for companies operating in the country. The flexibility in determining fiscal years and financial year-ends, along with strict accounting compliances such as bookkeeping and annual financial statement preparation, ensures transparency, accuracy and accountability in financial reporting.

The mandatory annual audits for certain types of companies further enhance the reliability and credibility of financial information, building trust among stakeholders and contributing to a robust business environment in the UAE. Compliance with these regulations not only fulfils legal requirements but also promotes integrity and confidence in the financial operations of businesses within the UAE.

Streamline your accounting compliance with Acclime

To ensure compliance with UAE’s accounting regulations, we recommend engaging with Acclime’s accounting services for accurate bookkeeping, preparation of financial statements and management reporting. Our team of experienced accountants will guide you through the process and handle your accounting needs with professionalism. Don’t hesitate to contact us for more information on our accounting services.