IT companies operating within the UAE are required to comply with the local accounting regulations established by the Ministry of Finance. Moreover, they are expected to conform to the regulations outlined in the UAE Commercial Companies Law. IT companies in UAE are responsible for upholding precise financial documentation, creating comprehensive financial statements, and presenting yearly audited financial reports to the appropriate governing bodies. Failing to do so may result in administrative penalties for the company. To avoid any issues, you are welcome to get in touch with our accountants in Dubai who can assist you with audit, bookkeeping, payroll, and accounting for IT companies in UAE.
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Accounting standards in UAE
In the United Arab Emirates (UAE), two extensively employed accounting standards prevail: Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). While the UAE does not have its own GAAP, it adopted IFRS as the standard for financial reporting.
In 2015, the UAE Commercial Companies Law was introduced, and the Securities and Commodities Authority (SCA) made it mandatory for businesses to follow IFRS as prescribed by the Central Bank of the UAE. This means that IT companies listed on the NASDAQ Dubai, Dubai Financial Market (DFM), or Abu Dhabi Securities Exchange (ADX) must maintain their accounting records per IFRS.
Even for IT companies not listed on these exchanges, there is encouragement to adopt and implement IFRS. Private IT companies, especially those established under The UAE Commercial Companies Law, are also required to adhere to international accounting rules.
To comply with local laws, regulations, and IFRS, IT companies in the UAE must have qualified accountants who can effectively maintain their financial records. Payroll and proper bookkeeping are essential to meet these standards and ensure accurate financial reporting. If you are seeking services regarding accounting for IT companies in UAE, please consult with our specialists.
How can our Dubai accountants help you?
IT companies need accounting in the UAE for several essential reasons. If you need any help regarding accounting for IT companies in UAE, our Dubai accountants can assist you with:
- Legal compliance: UAE laws, including the UAE Commercial Companies Law, require businesses to maintain proper accounting records. IT companies must adhere to local regulations and international financial reporting standards (IFRS) if they are listed on exchanges or formed based on specific laws. Our accountants in Dubai can help you understand and comply with these regulations.
- Taxation: Accurate accounting is crucial for calculating and reporting taxes. The UAE has implemented a value-added tax (VAT) system, and IT companies must keep track of their transactions and financial activities to comply with VAT regulations and other tax requirements. Please consult with experts at our accounting firm in Dubai to learn about taxation.
- Financial reporting: IT companies need accountants to prepare financial statements, such as balance sheets, income statements, and cash flow statements. These reports provide valuable insights into a company’s financial health and performance, which are essential for making informed business decisions.
- Audits and compliance checks: IT companies in UAE might undergo audits by regulatory authorities or external auditors. Proper accounting offered by our Dubai accountants ensures that companies can undergo these checks smoothly and demonstrate compliance with financial regulations.
- Legal disputes: In the event of legal disputes or litigations, accurate financial records can be crucial evidence in court proceedings.
Overall, accounting is a fundamental aspect of running an IT company in UAE, ensuring compliance with the law, informed decision-making, and financial stability. It enables IT companies to maintain transparency, make better financial choices, and enhance their overall performance in the competitive market.
VAT in UAE
If you are interested in knowing about the value-added tax rate applied to IT companies in UAE, please consult with our Dubai accountants. Also, note that zero-rated supplies refer to goods and services that are subject to 0% VAT rate within the context of the Gulf Cooperation Council (GCC) member states, excluding those that implement VAT. This rate is applied to items and services that are designated for export outside of the VAT-implementing GCC member states. Several categories of supplies fall under the zero-rated VAT classification, to promote certain sectors and facilitate international trade. However, the established standard rate of VAT is 5% for IT companies in UAE. If you are seeking assistance to understand taxes in UAE, please contact our accountants in Dubai.