UNITED ARAB EMIRATES

Meru Accounting provides specialized accounting and bookkeeping services in the UAE, catering to businesses of all sizes. With expertise in VAT compliance, payroll management, and financial reporting, Meru Accounting ensures accurate and transparent financial records. Our services are designed to support businesses across various sectors, promoting efficiency and regulatory compliance in the dynamic market of the UAE.

In UAE there are  indirect tax laws related to Value Added Tax (VAT), few of them is listed below:

1.Registration Requirement:

 Businesses exceeding the mandatory threshold must register for VAT.

2.VAT Rates: 

In the UAE, a standard Value Added Tax (VAT) rate of 5% applies to most taxable supplies unless exceptions are explicitly stated.

3.Input Tax Credit: 

Registered businesses can claim input tax credit on VAT paid on purchases used for taxable supplies.

4.Penalties and Fines: 

Non-compliance with VAT regulations may result in penalties, fines, and legal consequences.

5.Record Keeping: 

Businesses must maintain accurate records of all transactions, invoices, and VAT-related documents for a specified period.

6.VAT Refunds: 

Certain businesses may apply for VAT refunds under specific conditions, such as for exports or zero-rated supplies.

In the UAE, several accounting and bookkeeping software solutions are widely used by businesses to manage their financial records and comply with VAT regulations. 

Some popular software options include:

1.QuickBooks:

QuickBooks is a widely recognized accounting software that offers various features tailored for small to medium-sized businesses in the UAE.

2.Xero: 

Xero is a widely used cloud-based accounting software in the UAE, valued by businesses for its user-friendly interface and extensive accounting features.

3.Sage:

Sage accounting software is known for its robust features and scalability, suitable for both small businesses and larger enterprises in the UAE.

4.Zoho Books:

Zoho Books provides cloud-based accounting software solutions that cater to businesses of all sizes, offering features like invoicing, expense tracking, and financial reporting.

5.Tally.ERP 9: 

Tally.ERP 9 is widely used in the UAE for its accounting and inventory management capabilities, particularly favored by many businesses operating in the region.

In the UAE, financial records and accounts are maintained using the United Arab Emirates Dirham (AED) as the standard currency. It is the official currency of the UAE and is used for all financial transactions, including recording revenues, expenses, assets, liabilities, and other financial activities within businesses and organizations operating in the country. 

The Dirham is denoted by the symbol "د.إ" or "AED" internationally. Its stability and recognition as legal tender ensure consistency and accuracy in financial records across the UAE.

In the UAE, English is predominantly used for bookkeeping and accounting purposes. English serves as the primary language of business and commerce, facilitating clear communication and standardization in financial reporting and documentation. This linguistic choice ensures uniformity and compatibility with international accounting standards, benefiting both local businesses and multinational corporations operating within the UAE's diverse economic landscape. Arabic remains essential for legal and governmental purposes, requiring certified translations of financial documents and official submissions. Bilingual proficiency is crucial for accountants to navigate the dual language landscape, ensuring effective interaction with both local authorities and international clients. 

 Here are the key aspects of audit requirements in the UAE:

• Mandatory Audits: 

Companies established in mainland UAE (outside free zones) are generally required to conduct annual financial audits .Free zone companies may have specific audit requirements outlined by the respective free zone authority or based on their activities.

• Reporting Requirements:

Auditors prepare an audit report detailing their findings on the financial statements’ accuracy and compliance with accounting standards.The audit report is typically submitted to shareholders, management, and relevant authorities.

•  Special Audits:

Authorities or shareholders may request special audits to investigate specific financial matters, compliance issues, or suspected irregularities.

• Internal Control Requirements:

Companies are encouraged to establish robust internal control systems to ensure accurate financial reporting and facilitate the audit process.

Managing payroll in the UAE involves adhering to specific regulations and practices tailored to the country's labor laws and taxation system.

•   Salary Payments:

 Salaries are typically paid monthly and must be in UAE Dirhams (AED). Payments should include basic salary, allowances, and any agreed-upon benefits.

•   Employment Contracts: 

Every employee must have a written employment contract outlining salary details, benefits, working hours, and other terms of employment.

•   Wages Protection System (WPS): 

The WPS is a system mandated by the UAE government to ensure timely and accurate salary payments to employees. It applies to all private sector companies and requires employers to process payroll through approved banks and financial institutions.

•   Deductions: 

Deductions from salaries may include taxes (such as income tax for non-resident individuals), social security contributions (like pension funds), and other statutory deductions as per UAE labour regulations.

•   Annual Leave and Overtime: 

Employees are entitled to annual leave and overtime pay as per UAE labour law regulations.

•   Taxation: 

As of now, there is no personal income tax in the UAE. Employers are required to comply with VAT regulations concerning specific employee benefits.

In the UAE, the Generally Accepted Accounting Principles (GAAP) are primarily influenced by International Financial Reporting Standards (IFRS). 

• Adoption of IFRS: 

The UAE generally follows IFRS as issued by the International Accounting Standards Board (IASB).Companies listed on UAE stock exchanges are required to prepare their financial statements in accordance with IFRS.

• Financial Reporting: 

Entities are required to follow the principles and guidelines set forth by IFRS when drafting their financial statements. These financial statements include a balance sheet, an income statement, a statement of changes in equity, a cash flow statement, and detailed explanatory notes.

• Disclosure Requirements: 

Disclosures in financial statements must provide sufficient information to enable users to understand the financial position, performance, and cash flows of the entity.

• Local Variations: 

While IFRS forms there may be local interpretations or regulatory adjustments that entities need to consider .Sector-specific guidelines or regulations may impose additional reporting or disclosure requirements on certain industries or entities.

At Meru Accounting, We guide  a path to businesses and companies of the United  Arab Emirates a legitimacy and safe keeping and storing of all the accounting and finance records efficiently in a synchronized sequence. Indirect taxes and laws of UAE are on the basis of VAT refunds , record keeping, penalties etc. Payroll processes ensure employee contracts, their records, everything is taken care of and prioritized to ensure smooth functioning of the companies, firms or businesses of UAE.