Accounting Services in Dubai

Dubai is globally recognized as one of the top destinations for establishing and running a business for a multitude of reasons – from the overall business-friendly climate to tax advantages and reduced bureaucracy. Naturally, every business, from a small start-up to an international company, requires proper accounting in order to run smoothly, optimize the costs, and avoid getting in trouble with the authorities. In this guide, we will explore the field of accounting services in Dubai.

Accounting Support by Emirabiz

At Emirabiz, we provide all-around corporate support services, from company setup to corporate management, accounting, regulatory compliance, and more. Our team includes such seasoned experts in related fields as business consultants, financial advisors, accountants, lawyers, real estate agents, and market analysts. We can help you open and run a business in Dubai and the UAE and navigate you through the intricacies of the local business environments and field-specific regulations.

The Emirabiz team provides the following accounting services:

•  Monthly accounting
•  VAT registration
•  Audit reports
•  Corporate tax and VAT consultancy
•  Submitting VAT returns
•  Preparation of Invoices and records keeping
•  Visiting accountant

Our experts can provide you with advice on a range of business and accounting-related issues with regard to specific business activities, operational scopes, supplied goods and services, legal entity types, and other aspects. We can help you answer such vital questions as:

•  Is my company subject to paying VAT and corporate tax?
•  Can I get a tax registration number for an offshore company?
•  How to prepare my VAT reports for the FTA?
•  How do I make sure my invoices are issued properly?
•  How to avoid penalties associated with accounting and taxes?
•  Do I have to pay VAT if my business is conducted overseas?

Our trained consultants will explain all of this in detail. Contact us to get a free consultation now!

What Is Accounting and Why Is It Important?

In essence, accounting is the process of recording, analyzing, and reporting financial transactions of an individual or an organization. It involves the complete and systematic recording of financial activities, including the aggregation, analysis, and reporting of these transactions to regulatory bodies, stakeholders, and management.

The primary goals of accounting include maintaining scrupulous financial records, tracking income and expenses, ensuring conformance with the applicable tax laws and regulations, and ensuring an accurate picture of the entity’s financial health and performance.

Overall, accounting plays a key part in helping companies and individuals make adequately supported financial decisions and maintain accountability in their financial activities. There are different branches of accounting, each serving specific purposes within an enterprise, such as:

Financial Accounting

This branch of accounting focuses on the preparation and reporting of financial information for external users, such as investors, creditors, regulators, and other stakeholders. Its main objective is to provide a comprehensive and accurate view of a business’s financial performance and state. The information provided by financial accounting is essential for making investment decisions and assessing creditworthiness along with the company’s overall financial abilities.

Management Accounting

This is the process of analyzing and preparing financial information for use by management to make the right business decisions. It involves the preparation of financial reports, budgeting, cost analysis, and providing support for strategic planning and decision-making. Management accountants provide insights into the financial implications of business operations and help managers understand and evaluate financial data in order to achieve the organization's goals.

Auditing

Auditing comprises evaluating and reviewing an organization's transactions, financial records, and internal controls, which allows for accuracy, compliance with the relevant regulations, and reliability of financial reporting. The goal of auditing is to identify any errors, misstatements, or fraudulent activity, and provide recommendations for improvements in financial controls and reporting processes.

Auditing is typically conducted by independent certified public accountants (CPAs) or internal auditors to inform and assure stakeholders, such as investors, creditors, and government agencies, about the integrity of the organization's financial statements.

Cost Accounting

This branch involves the process of recording, analyzing, and reporting on the costs associated with the production of goods or services within an organization. It’s aimed at providing detailed information on the costs incurred in various facets of a business, such as production, operations, and other activities, for the purpose of internal cost control, assessment of performance, and proper decision-making.

Tax Accounting

This is the area of accounting that deals with the preparation, analysis, and interpretation of tax returns and tax-related financial documents. It involves understanding and managing tax liabilities, ensuring conformance with the tax laws in effect, and identifying opportunities for minimizing tax expenses.

Tax accountants also provide advice to individuals and businesses on tax planning strategies, deductions, and credits, and help in the preparation of tax returns. The primary objective of tax accounting is to accurately calculate and report an individual or organization's tax obligations to the government.

Accounting Information Systems

An Accounting Information System (AIS) is a system that collects, stores, processes and communicates financial and accounting information. It combines the study and practice of accounting with the design, implementation, and monitoring of computerized information systems. AIS is used to support the day-to-day operations of an organization, as well as to provide financial data to decision-makers for managerial analysis and strategic planning.

Other accounting-related services include business planning, forensic accounting, feasibility studies, etc.

Bookkeeping in Dubai

Bookkeeping in Dubai follows specific guidelines and regulations set by the government. The UAE Commercial Companies Law (CCL) mandates all companies, including free zone entities, to maintain thorough accounting records and keep financial statements for at least 5 years. Additionally, businesses in the UAE must comply with IFRS when compiling their financial reports.

Bookkeeping in Dubai often involves the use of accounting software to record and track financial transactions, as well as to generate financial reports. It is essential for businesses to ensure that their bookkeeping practices are accurate to avoid any penalties or legal issues.

Furthermore, it is common for businesses in Dubai to outsource their bookkeeping needs to professional accounting firms to ensure adherence to the local laws and focus on their primary business activities. This is particularly beneficial for small and medium-sized enterprises (SMEs) that may not have the resources to maintain an in-house accounting department.

Accounting Audits in Dubai

In Dubai, auditing is also governed by the CCL and is essential for ensuring transparency and authenticity in financial reporting. The UAE Ministry of Economy is the regulatory authority responsible for overseeing accounting and auditing standards in the country.

There are several key elements to consider when conducting accounting audits in Dubai:

Compliance with IFRS

Companies in the UAE are required to adhere to IFRS, which is the global accounting standard used in the execution of financial statements. Accounting audits ensure that companies are compliant with these standards.

Regulatory requirements

Companies in the UAE are subject to specific regulatory requirements, including filing annual financial statements with the relevant authorities. Accounting audits confirm compliance with these regulations.

Internal control systems

Accounting audits assess the effectiveness of a business's systems of internal control to identify and mitigate financial risks, fraud, and errors.

Tax compliance

Accounting audits also include a review of a company's tax compliance to provide precise reporting and payment of taxes per UAE tax laws in effect.

Reporting requirements

The verified financial statements are required to be submitted to relevant authorities, shareholders, and other stakeholders. The audit report provides an independent opinion on the accuracy and fairness of the financial statements.

In the UAE, accounting audits are typically conducted by licensed audit firms or accredited auditors. These auditors are required to adhere to professional standards and ethical guidelines established by the UAE Auditors and Accountants Association (AAA) and the International Federation of Accountants (IFAC).

Corporate Taxes in Dubai

Dubai is an attractive location for multinational corporations and entrepreneurs looking to establish or expand their business operations. Corporate taxes in Dubai are relatively low, with the government aiming to attract foreign investment and foster economic growth.

As of June 1, 2023, the corporate tax rate in Dubai is 9% for businesses with net annual profits exceeding AED 375,000, while companies with net annual profits lower than this threshold are taxed at 0%. However, this is mainly related to companies based in the Dubai mainland, as well as businesses in certain industry fields, while businesses established in free zones may be exempt from corporate tax, as they are subject to different tax structures and regulations.

Also, large multinational companies may be taxed at a higher rate under the second pillar of the Organization for Economic Co-operation and Development (OECD). This category will include companies with total revenue of more than AED 3.15 billion.

It's important to note that certain industries, such as oil and gas, banking, and telecommunication, may be subject to specific taxes and regulations. It's recommended for businesses to consult with a tax advisor or legal professional to ensure adherence to Dubai’s tax regulations.

VAT and Corporate VAT in Dubai

The UAE, including Dubai, operates under a VAT system with a standard rate of 5%. VAT is imposed on the majority of goods and services provided in the country, including those related to the corporate sector.

Regarding corporate VAT specifically, businesses in Dubai are required to register for VAT if the value of their annual taxable supplies and imports goes beyond the mandatory registration threshold, presently set at AED 375,000. There is also an option of voluntary VAT registration for businesses with over AED 187,500 in taxable supplies. In order to run a VAT-free business, you need this value to be lower than the abovementioned limit or supply solely goods and services subject to 0% VAT.

Once registered, companies are obligated to adhere to VAT regulations, such as charging VAT on taxable goods and services, maintaining proper VAT records, filing VAT returns, and settling any VAT liabilities within the designated timeframe.

It's vital for businesses in Dubai to stay updated on VAT regulations and ensure compliance, as failure to adhere to VAT requirements can cause penalties and other legal consequences.

How to Provide Your Business with Accounting Services in Dubai

Of course, there are numerous accounting service providers in Dubai for all types of businesses. They range from global networks providing full accounting support, including software solutions and all types of services, to smaller firms focused on certain branches of accounting, as well as companies offering a list of related business support services.

When it comes to choosing between outsourced accounting and in-house accounting, businesses in Dubai should consider the following:

Outsourced Accounting

Outsourcing accounting services to a third-party provider can be cost-effective and convenient for businesses, especially for SMEs. It allows businesses to concentrate on their main activities while experts handle their accounting needs.

In-House Accounting

In-house accounting gives businesses more control over their financial processes and allows for better integration with other departments. However, it can be more expensive and time-consuming to hire and train staff for in-house accounting.

Ultimately, the choice between outsourced and in-house accounting depends on the specific needs and resources of each business. Accounting service providers in Dubai can help businesses assess their requirements and choose the best accounting solution for their organization.

If you are looking to open a business in Dubai, depending on its size and the scope of operations, you might be looking for specific software solutions for your accounting needs. Some popular accounting software used in Dubai are:

•  QuickBooks
•  Xero
•  Zoho Books
•  Tally ERP 9
•  Sage 50
•  Wave
•  FreshBooks
•  MYOB

These software are widely used by businesses and accounting professionals in Dubai for managing their financial transactions, invoicing, inventory management, and other accounting needs.

Conclusion

Accounting in all its forms is essential to the success of any company regardless of its size or business activities. Although Dubai is a great place for entrepreneurs, it has its own unique features and nuances, which are in turn magnified by the specifics of any given business that cannot be fully explored in a single guide. If you need expert advice or professional help with your company’s accounting or other issues related to corporate support, contact our team now and get a free consultation!