For years a UAE business could keep whatever records suited it and tidy them up when a bank or a free zone asked. Corporate tax ended that. The records are now the basis of a filed return, and the standard they have to meet is set out in law rather than left to judgment.
UAE corporate tax requires accounting records and supporting documents to be kept for seven years from the end of the relevant tax period, under Article 56 of Federal Decree-Law No. 47 of 2022. Accrual accounting is the default, with cash basis permitted only where revenue does not exceed AED 3 million. Audited financial statements are required where revenue exceeds AED 50 million, and for Qualifying Free Zone Persons and Tax Groups regardless of revenue, under Ministerial Decision No. 84 of 2025.
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Quick Summary
| Requirement | Position |
| Record retention, corporate tax | 7 years from end of the tax period — Art. 56, FDL 47/2022 |
| Record retention, VAT | 5 years; capital assets 10 years; real estate 15 years |
| Record retention, Commercial Companies Law | 5 years from end of financial year — FDL 32/2021 |
| Accounting basis | Accrual by default; cash basis only if revenue ≤ AED 3m |
| Accounting standard | IFRS; IFRS for SMEs available where revenue ≤ AED 50m |
| Audited financial statements | Required where revenue exceeds AED 50m |
| Qualifying Free Zone Persons | Audited financial statements regardless of revenue |
| Tax Groups | Audited special purpose financial statements regardless of revenue |
| Small Business Relief | Revenue below AED 3m — relief from tax, not from records |
💡 TaxKitab Tip Default to seven years for everything. The retention periods differ by law — five under VAT and the Companies Law, seven under corporate tax, ten for capital assets, fifteen for real estate — and no business reliably sorts its filing by which statute a document belongs to. One seven-year rule covers the common cases, and real estate and capital asset records get flagged separately for longer. Note also that the clock runs from the end of the tax period, not the transaction date, so a January 2026 invoice in a calendar-year business is retained from December 2026.
Small Business Relief Is Not Relief From Bookkeeping
This is the most common misreading, and the most expensive.
A business with revenue below AED 3 million may elect Small Business Relief and be treated as having no taxable income for the period. That is relief from tax — not from registering, filing, or keeping records that substantiate the election.
If the FTA asks how you established revenue was below the threshold, the answer has to be in the books. A business that claimed relief and cannot demonstrate the figure is worse off than one that simply paid.
The Accounting Basis Question
Accrual is the default. Cash basis is available only where revenue does not exceed AED 3 million, or in exceptional circumstances with FTA approval.
In practice this catches businesses that grew. A company legitimately on cash basis at AED 2.4 million that crossed the threshold has to move to accrual, and the transition has to be done properly — opening balances for receivables, payables, accruals and prepayments established, not assumed. That is a one-off piece of work, and much cheaper done deliberately than discovered at audit.
The Standard: IFRS, or IFRS for SMEs
IFRS is the required framework. A taxable person with revenue not exceeding AED 50 million may apply IFRS for SMEs instead, provided it is eligible and applies the framework properly and consistently.
This threshold is separate from the audit threshold even though the number is the same: one decides which standard you report under, the other whether an auditor signs it. “Consistently” is the part that gets tested — switching framework between years, or applying IFRS for SMEs selectively where it happens to be simpler, surfaces in review.
When an Audit Is Required
Under Ministerial Decision No. 84 of 2025, which replaced MD 82 of 2023 for tax periods beginning on or after 1 January 2025:
- A taxable person that is not a Tax Group must prepare audited financial statements where revenue exceeds AED 50 million. Exactly AED 50 million does not trigger it.
- Qualifying Free Zone Persons must prepare audited financial statements regardless of revenue.
- Tax Groups must prepare audited special purpose financial statements regardless of revenue, per FTA Decision No. 7 of 2025. These are not ordinary IFRS 10 consolidated accounts — they aggregate the standalone information of parent and each subsidiary line by line, apply consistent policies, and eliminate intra-group transactions.
Separately, many free zones — DMCC, JAFZA, DIFC, ADGM among them — require annual audited statements for licence renewal regardless of the above.
What the Books Actually Have to Do Now
The practical standard, as distinct from the legal citation.
Complete. Every bank account, card and payment channel reconciled monthly, with the reconciliation retained — not reconstructed at year end.
Supported. Each material entry traceable to a document. A journal with a one-word narration and no attachment is the entry that gets questioned.
Consistent. Same policies period to period, same chart of accounts, same treatment of similar transactions.
Separated. Owner and related-party transactions identified as such, not buried in general expense accounts. This is the commonest problem in owner-managed UAE entities and it matters more under corporate tax than it did before.
Current. Books closed monthly. A business that closes once a year cannot answer an FTA query about month four without reconstructing it.
The mechanics of getting to that state are the ordinary monthly discipline described in the month-end close checklist, and where books have fallen behind, the sequence in catch-up bookkeeping when you are a year behind.
Penalties
Published penalty figures for failure to maintain required records are AED 10,000 per violation, rising to AED 20,000 for a repeat within 24 months, with similar amounts for destroying records inside the retention window.
The larger exposure is not the fixed penalty. It is that inadequate records permit an estimated assessment, and an assessment you cannot rebut with documents is one you pay.
What We Do and Do Not Do Here
Our UAE scope is accounting and bookkeeping — maintaining and reconciling the records, closing monthly, and preparing financial statements to the applicable framework, so that whoever files your return or signs your audit has something reliable to work from. We do not file UAE corporate tax or VAT returns and we are not your tax agent; that sits with your UAE-registered agent or auditor.
Businesses with records across jurisdictions should also read how long to keep business records in the US, UK and UAE, and the cost comparison is in what outsourced bookkeeping actually costs.
Frequently Asked Questions
We elected Small Business Relief. Do we still need proper books? Yes. The relief removes tax, not the obligation to register, file and maintain records that substantiate the revenue figure you relied on.
How long do we really need to keep records? Seven years from the end of the tax period for corporate tax. VAT records are five, capital assets ten, and real estate fifteen under the VAT Executive Regulation as amended. Defaulting to seven, with real estate and capital assets flagged for longer, is the practical rule.
Our revenue is AED 40 million. Do we need an audit? Not for corporate tax under MD 84 of 2025, unless you are a QFZP or in a Tax Group. Your free zone, licensing authority, bank or lender may still require one.
Can we stay on cash basis? Only while revenue does not exceed AED 3 million, or with specific FTA approval. Above that, accrual — and the transition needs doing properly.
Does the retention clock start at the invoice date? No, at the end of the tax period. For a calendar-year business, a January invoice is retained from the following December.
References
- Federal Decree-Law No. 47 of 2022 (Corporate Tax Law), Article 56 — record retention, 7 years
- Ministerial Decision No. 84 of 2025 — audited financial statements; replaced Ministerial Decision No. 82 of 2023 for tax periods beginning on or after 1 January 2025
- FTA Decision No. 7 of 2025 — special purpose financial statements for Tax Groups
- Federal Decree-Law No. 28 of 2022 (Tax Procedures Law) and Federal Decree-Law No. 8 of 2017 (VAT), with Cabinet Decision No. 52 of 2017 Article 71 as amended by Cabinet Decision No. 100 of 2024
- Federal Decree-Law No. 32 of 2021 (Commercial Companies Law) — 5-year retention
⚠️ Thresholds, decisions and penalty amounts in this post are drawn from secondary summaries of UAE legislation and were current when written. Confirm your own position against the FTA’s published text and with a UAE-registered tax agent before acting — we provide bookkeeping, not UAE tax advice.
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