Introduction
Loads has been and is said about the obligations of Dubai based companies.
This post intends to globally in summary address them as an initial induction into the topic.
Dubai-based companies, like those in many other jurisdictions, have various accounting obligations that they must fulfil to comply with local regulations. Some of the key accounting obligations for companies operating in Dubai include (a) financial reporting; (2) annual audit, (3) tax filings, (4) Statutory Compliance, (5) Corporate Governance, (6) Disclosure Requirements, (7) Compliance with regulatory changes and (8) Record keeping.
We expand on each below:
Financial Reporting
The obligations of Dubai based companies include financial reporting. In Dubai are required to prepare financial statements annually, typically comprising a balance sheet, income statement, cash flow statement, and statement of changes in equity.
These financial statements must comply with the International Financial Reporting Standards (IFRS) or other approved accounting standards, such as the Generally Accepted Accounting Principles (GAAP) in certain free zones or industry-specific standards.
The financial statements provide stakeholders, including shareholders, investors, lenders, and regulatory authorities, with a clear overview of the company’s financial performance, position, and cash flows.
Annual Audit
Most Dubai-based companies, including mainland companies and those operating in free zones, are required to undergo an annual audit of their financial statements by an approved auditor or audit firm.
The audit ensures the accuracy and reliability of the financial information presented in the company’s financial statements.
Audited financial statements provide assurance to stakeholders and regulatory authorities regarding the company’s financial health and compliance with accounting standards and regulations.
The date by which auditors are required vary from jurisdiction to jurisdiction. It is important that you know the deadlines and obligations of your Dubai based company and a compliance calendar is clear and laid out for you.
Obligations of Dubai based Companies: Tax Filings
Dubai-based companies may have tax filing obligations with the Federal Tax Authority (FTA), particularly since the introduction of Value Added Tax (VAT) in the UAE in 2018 and the increase obligations with the entry into force of Corporate Tax in June 2023 for fiscal years commencing then. Most Dubai based companies will jump into the increase obligations in 2024 as most fiscal years follow the calendar moon.
Companies are required to file periodic VAT returns, usually on a quarterly basis, reporting their taxable supplies, input VAT, and any VAT liability or refund due. Companies will be required to file annual Corporate tax filings starting as soon as early in 2024 for companies with 1 June 2023 starting fiscal year. Those with calendar fiscal year will need make payment of their first annual corporate tax by mid 2025.
Statutory Compliance
Dubai-based companies must comply with various statutory reporting requirements imposed by regulatory authorities such as the Department of Economic Development (DED), Securities and Commodities Authority (SCA), and Dubai Financial Services Authority (DFSA).
This includes filing annual returns and financial statements, maintaining registers of shareholders and directors, and adhering to specific reporting guidelines prescribed by the relevant authorities.
Corporate Governance
Good corporate governance practices require Dubai-based companies to establish effective internal controls, risk management processes, and transparency mechanisms to safeguard the interests of shareholders and stakeholders.
This may involve appointing independent directors to the board, establishing audit committees, and implementing policies and procedures to ensure compliance with laws, regulations, and ethical standards.
Disclosure Requirements – obligations of Dubai based companies
Dubai-based companies may have disclosure obligations related to financial and non-financial information, including related-party transactions, contingent liabilities, significant events, and material risks.
Disclosure requirements may vary depending on the regulatory framework applicable to the company, such as the UAE Commercial Companies Law, Securities Law, or regulations issued by free zone authorities.
Compliance with Regulatory Changes
Companies operating in Dubai must stay informed about changes in accounting standards, tax laws, and regulatory requirements that may impact their financial reporting obligations.
This includes timely implementation of new accounting standards (e.g., IFRS updates), amendments to tax laws, and changes in regulatory reporting requirements issued by relevant authorities.
Record Keeping
Dubai-based companies are required to maintain proper accounting records and documentation to support their financial transactions, including invoices, receipts, contracts, bank statements, and general ledger entries.
Records must be kept for the prescribed period as per regulatory requirements, typically for a minimum of five to ten years, to facilitate audits, inspections, and regulatory compliance reviews.
Conclusion to Obligations of Dubai based companies
By fulfilling these accounting obligations, Dubai-based companies can ensure transparency, compliance, and accountability in their financial reporting practices, thereby enhancing trust and confidence among stakeholders and regulatory authorities.
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We hope this publication will help you understand the importance of the obligations of Dubai based companies and remain available for any legal and commercial question regarding the UAE.
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*The information on this page is not intended to be legal advice. This article is intended to provide an initial introduction to obligations of Dubai based companies.