UAE Dubai - Maintenance of Books of Accounts_Corporate Tax
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Talreja and Talreja
Mar 6, 2025, 11:31:05 PM3/6/25
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Dear Members,
Maintenance of Books of Accounts_UAE Corporate Tax
As we know, UAE has introduced corporate income tax for entities conducting business, and same shall be applicable effective from financial year beginning 1stJune 2023.
As per UAE Corporate Tax Law, maintenance of books of accounts shall be mandatory and one need to maintain the same as per International Financial Reporting Standards and the same shall be retained for a period of atleast 7 years.
Kindly note that without maintaining proper books of accounts, it shall not be possible to file Annual Corporate Tax Return. Hence, each entity shall ensure to maintain proper books of accounts and same shall be in line with its First Corporate Tax Period.
Further, while maintaining books of accounts, more or less all genuine business expenses shall be allowed as deduction with few exceptions mentioned below.
Deductible Expenses/Partially Deductible Expenses:
- All legitimate business expenses deductible;
- Payments to Connected Persons as per Market Value (e.g. Salaries to Partners/Owners/Investors etc.): Full deduction allowed;
- Entertainment Expenses – Only 50% allowed;
- Net interest expenditure up to Aed 12 million: Full deduction allowed;
- All genuine business expenses should be adequately supported by supporting documents.
Non-Deductible Expenses:
- Expenses such as bribes, fines and penalties – Not Deductible; (other than amounts awarded as compensation for damages or breach of contract);
- No deduction is available for expenditure incurred in deriving Exempt income like Dividend Income etc.
- Donations, grants or gifts made to not a Qualifying Public Benefit Entity – Not Deductible;
- Any sort of Personal expenses - Not deductible;
- Efforts should be made to restrict transactions in Cash.
- You are requested to take note of above and make appropriate Grouping & Classification changes in the Chart of Accounts so that it is easy to trace such transactions and it will help in complying with UAE Corporate Tax Law.
Maintenance of Books of Accounts_UAE Corporate Tax
As we know, UAE has introduced corporate income tax for entities conducting business, and same shall be applicable effective from financial year beginning 1stJune 2023.
As per UAE Corporate Tax Law, maintenance of books of accounts shall be mandatory and one need to maintain the same as per International Financial Reporting Standards and the same shall be retained for a period of atleast 7 years.
Kindly note that without maintaining proper books of accounts, it shall not be possible to file Annual Corporate Tax Return. Hence, each entity shall ensure to maintain proper books of accounts and same shall be in line with its First Corporate Tax Period.
Further, while maintaining books of accounts, more or less all genuine business expenses shall be allowed as deduction with few exceptions mentioned below.
Deductible Expenses/Partially Deductible Expenses:
- All legitimate business expenses deductible;
- Payments to Connected Persons as per Market Value (e.g. Salaries to Partners/Owners/Investors etc.): Full deduction allowed;
- Entertainment Expenses – Only 50% allowed;
- Net interest expenditure up to Aed 12 million: Full deduction allowed;
- All genuine business expenses should be adequately supported by supporting documents.
Non-Deductible Expenses:
- Expenses such as bribes, fines and penalties – Not Deductible; (other than amounts awarded as compensation for damages or breach of contract);
- No deduction is available for expenditure incurred in deriving Exempt income like Dividend Income etc.
- Donations, grants or gifts made to not a Qualifying Public Benefit Entity – Not Deductible;
- Any sort of Personal expenses - Not deductible;
- Efforts should be made to restrict transactions in Cash.
- You are requested to take note of above and make appropriate Grouping & Classification changes in the Chart of Accounts so that it is easy to trace such transactions and it will help in complying with UAE Corporate Tax Law.
Regards
CA Kapil Talreja
U.A.E || U.S.A: +971-55-4559621
INDIA: +91-6356000989
Our Website | LinkedIn | Instagram | Facebook | Telegram
CA Kapil Talreja
U.A.E || U.S.A: +971-55-4559621
INDIA: +91-6356000989
Our Website | LinkedIn | Instagram | Facebook | Telegram
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