Ensuring financial compliance is a crucial need for all organizations. It acts as an essential deterrent to dishonest behavior, protecting stakeholders’ interests and upholding the organization’s integrity. Accurate financial records are essential for a healthy organization, but keeping them up to date internally typically takes a lot of time and resources.
Businesses are required by law to comply with a broad range of regulatory requirements. Financial, employment and labor, health and safety, data privacy and security, industry-specific intellectual property (IP), and so on. Bookkeeping requires adherence to IFRS, so accounting and bookkeeping businesses in Dubai ensure to get your books of account right.
Bookkeeping dates back to the Babylonians in 2600 BCE. During this time, they used styli to record transactions in slabs of clay. Then, fast forwarding to Renaissance Italy, Luca Pacioli, the Father of Accounting, formalized the double-entry accounting system, around 1494.
5 Ways Accounting and Bookkeeping Services Can Help Be Compliant
Here are 5 ways accounting and bookkeeping services can help you be compliant –
- Maintaining Accurate Financial Records
Keeping accurate is very important, and bookkeeping services play a crucial role in ensuring the financial health and transparency of a business. Proper bookkeeping provides a clear audit trail for internal review and external audits, facilitates accurate tax reporting, and helps identify trends or anomalies in the business’s financial performance. Bookkeepers maintain and keep the records up-to-date, in addition to helping the businesses owners to have a proper understanding of their financial condition, make sound decisions, and address any discrepancies.
- Corporate Tax Regulation
Corporate tax was implemented in June 2023, and has become one of the most crucial financial laws in Dubai. Hence, bookkeeping and accounting services help businesses prepare for the new tax regime in Dubai by ensuring proper record-keeping and compliance. These services help in calculating taxable income exceeding AED 375,000, and managing the 0% rate of taxable income up to AED 375,000. They also assist businesses understanding and applying various deductions and credits available under the new tax law, which potentially reduces the tax liability.
- Economic Substance Regulations (ESR) Compliance
ESR was introduced in 2019, which required certain businesses to demonstrate real economic activity in the country. Bookkeeping services in Dubai ensure to determine if a business falls under the scope of ESR and identify which activities are considered “Relevant Activities.” For the businesses deemed as falling under the category, they provide proper details to prove adequate economic substances in the UAE. This includes recording the main income generation activities, tracking the number of full-time employees, and maintaining information about physical assets.
In addition, they also assists businesses in Dubai on potential changes in the business operation to meet substance requirements. Even they help in small business bookkeeping by helping them prepare and file required annual ESR notifications and reports.
- VAT Compliance
Since its introduction in 2018, there has been a huge change in how a company operates. Bookkeeping services help in registering for VAT, whenever a company exceeds AED 375,000, to stay compliant to the law and regulation of the country. Once registered, these services maintain detailed records of all transactions, categorizing them into –
- Zero Rated
- Standard Rated
- Exempt Supplies
In addition to helping businesses stay compliant, they also ensure VAT is correctly charged. They ensure to prepare and submit VAT returns on quarterly basis, to the FTA (Federal Tax Authority).
- International Tax Compliance
Accounting and bookkeeping services help stay compliant to the International tax standards, and understand the Double Taxation Agreements (DTA), which the UAE has established with several countries. These help avoid double taxation on income from foreign sources. Accountants also ensure compliance with global reporting standards such as the Common Reporting Standards (CRS) and the Foreign Account Tax Compliance Act (FATCA). In addition, they help in assisting in structuring international transactions in an efficient manner, while ensuring compliance with the Dubai law and other jurisdiction.
As you know Dubai has a very strict regulation when it comes to finances. Hence, accurate financial reporting is very important to maintain accurate books of accounts. These services ensures that financial statements are prepared in accordance with applicable accounting standards, such as IFRS or GAAP, as required by several free zone companies in Dubai.
Best Accounting and Bookkeeping Services in Dubai
Even though companies in Dubai face many obstacles, they can thrive with the right assistance and well-considered strategic choices. With our accounting and bookkeeping services, business owners may get access to expertise, affordable solutions, and the freedom to concentrate on what really matters, running a profitable company.
Contact VAT Accounting UAE for better accounting services.