The significance of maintenance of book of accounts

Posted on Oct 25, 2017

The significance of maintenance of book of accounts

To ensure proper and controlled business management, maintenance of books of account is a mandatory step and should be taken into huge consideration. Nevertheless, it is mandatory to maintain the books of accounts under UAE company law and VAT law.

There is a general truth that the secret to the success of a business lies is the proper maintenance of accounting books and documents. This not only results in proper management and control of the business functions but also in effective business planning. In addition, it ensures flawless receipt and payment of cash and other transactions done by the company.

As per the UAE company law and VAT law, it is utmost mandatory for businesses to maintain the books of accounts. Let’s get to know more about the findings under Article 26.

  1. Each company should uphold appropriate accounting records mentioning its transactions and should unveil at any time the precise financial status of the business. The Partners or shareholders should verify that the books of accounts of the company are kept as per the provisions of this Law.
  2. Each company shall maintain its accounting books/records in its corporate office for a minimum period of 5 years from the expiration of the financial year of the company.
  3. The company may maintain an electronic copy of the original of the documents and records kept and submitted therein in accord with the controls directed by a Ministerial Decision.

Account Records-Under UAE VAT Law (as per clarifications given for Draft Law).

It is mandatory for every taxable person to maintain books of accounts under UAE VAT law. In addition to that the authority can ask for additional documents such as, annual accounts, general ledger, purchase day book, invoices issued, invoices received, credit notes, debit notes, VAT Ledger etc.

Under the UAE VAT law the books of accounts and records need to be sustained for five years.

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