Hi Oliver,

I'm Himanshi Dawra from DhanGuard. When planning Dubai business setup, it is important to establish proper accounting and tax procedures from the beginning. Corporate tax, VAT, financial record-keeping and audit requirements can vary depending on your company's activities, structure and turnover.

1. When Must a UAE Company Register for Corporate Tax?

UAE companies generally need to register for corporate tax with the Federal Tax Authority, including eligible free zone companies. Registration deadlines depend on the entity type and incorporation date.

The standard corporate tax rates are:

• 0% on taxable income up to AED 375,000.

• 9% on taxable income exceeding AED 375,000.

Qualifying Free Zone Persons may benefit from a 0% rate on qualifying income if they meet the applicable conditions. This does not mean every free zone company automatically receives the 0% rate.

2. What Accounting Records Should a Small Company Maintain?

A company should maintain organised financial records, including:

• Sales invoices and purchase receipts.

• Bank statements and transaction records.

• Expense and payroll records.

• Contracts and supplier agreements.

• Asset and inventory records, where applicable.

• VAT returns and corporate tax calculations.

These records help support tax filings and provide a clear picture of the company's financial position.

3. When Is VAT Registration Mandatory?

VAT registration is generally mandatory when taxable supplies and imports exceed AED 375,000 over the relevant 12-month period or are expected to exceed this threshold in the next 30 days.

Voluntary registration may be available when taxable supplies and imports, or eligible expenses, exceed AED 187,500, subject to the applicable rules.

You can review DhanGuard's VAT filing services for assistance with VAT compliance.

4. Are Audited Financial Statements Required for Every Company?

Not necessarily under one universal rule. Audit requirements depend on the company's jurisdiction, free zone regulations, legal structure and applicable tax conditions.

Some free zones require annual audited financial statements, while other companies may have different reporting obligations. Confirm the requirement with the relevant licensing authority before incorporation.

5. What Should Foreign Owners Know About Transferring Profits Overseas?

Foreign owners should maintain proper documentation for dividends, shareholder payments and other transfers. Before remitting funds, consider:

• Whether the payment is a dividend, salary, loan repayment or another transaction.

• Whether the distribution has been properly authorised and recorded.

• The company's available distributable profits.

• Bank documentation and source-of-funds checks.

• Tax implications in the UAE and the owner's country of residence.

A UAE company should not treat every transfer to an overseas personal account as a tax-free dividend.

Final Advice

For your software development business, establish bookkeeping procedures, confirm your corporate tax registration deadline and assess VAT and audit requirements before starting operations. Also consider the tax treatment of income from international clients and any transactions with related overseas businesses.

DhanGuard can guide you through Dubai company formation options and help you understand the setup requirements alongside your ongoing compliance responsibilities.

Best regards,
Himanshi Dawra
DhanGuard