Bookkeeping Requirements for a UAE Free Zone Company: What to Keep and for How Long

Corporate tax records run seven years, VAT real estate records fifteen, and an open audit adds four more. A Qualifying Free Zone Person also needs audited accounts at any revenue level, which rules out Small Business Relief entirely.

A UAE free zone company must keep its accounting records for at least seven years after the end of the tax period they relate to. That rule sits in Article 56 of Federal Decree-Law No. 47 of 2022, the Corporate Tax Law, and it applies whether the company pays nine per cent, claims the zero per cent rate on qualifying income, or files a return showing nothing owed.

Seven years is the floor rather than the full answer. VAT records, real estate records and anything caught by an audit run on different clocks, and a company claiming Qualifying Free Zone Person status must produce audited financial statements as well. Every figure, date and article number below was read from Ministry of Finance and Federal Tax Authority texts, rechecked on 7 October 2026.

Key takeaways

Corporate tax records: seven years after the end of the tax period, under Article 56 of the Corporate Tax Law.
The Tax Procedures Executive Regulation sets a general five year period, but only where the tax law does not say otherwise. For corporate tax it does.
Real estate records tied to VAT run for fifteen years after the end of the tax period.
A Qualifying Free Zone Person needs audited financial statements at any revenue level. Everyone else crosses that line above AED 50 million.
A dispute, an audit, or a notice of intent to audit adds four years to whatever period you thought applied.
Failing to keep the records the Corporate Tax Law requires carries AED 10,000, rising to AED 20,000 for a repeat within 24 months. The separate tax procedures schedule was cut to AED 1,000 in April 2026.

What counts as a record

Article 2 of Cabinet Decision No. 74 of 2023, the Executive Regulation of the Tax Procedures Law, defines accounting records and commercial books more widely than most owners expect. It names the balance sheet and profit and loss accounts, records of wages and salaries, records of fixed assets, and inventory records and statements with quantities and values at each tax period end, plus the stock counts behind them.

The second limb catches the paperwork behind the numbers: correspondence, invoices, licences and contracts, plus any document setting out an election, assessment, determination or calculation made about the company’s tax affairs, including the basis or method used. That last phrase does real work. If you decided a cost was deductible, or that a transaction fell inside qualifying income, the reasoning is itself a record you must hold.

One issue we often see with small free zone entities is a clean set of bank statements sitting beside almost nothing else. The statements show money moved. They do not show what was supplied, to whom, or under which contract, and that gap turns a short query into a long one.

How long to keep each type of record

There is no single retention number, because three instruments set periods and they do not agree. Article 3 of Cabinet Decision No. 74 of 2023 opens with the words “unless the Tax Law states otherwise”, then sets five years following the tax period for a taxable person and seven years from the end of the calendar year of creation for real estate records. The Corporate Tax Law does state otherwise, at seven years. The VAT Executive Regulation, Cabinet Decision No. 52 of 2017 as amended, goes further: Article 71 holds real estate records for fifteen years after the end of the tax period.

Record type	Retention period	Source
Corporate tax records and supporting documents	7 years after the end of the tax period	Corporate Tax Law, Article 56
Records of an exempt person proving its status	7 years after the end of the tax period	Corporate Tax Law, Article 56(2)
General records of a taxable person	5 years following the tax period	Cabinet Decision 74 of 2023, Article 3
Real estate records under the Tax Procedures rules	7 years from the end of the calendar year of creation	Cabinet Decision 74 of 2023, Article 3
Real estate records for VAT	15 years after the end of the tax period	Cabinet Decision 52 of 2017, Article 71

Then come the extensions in Article 3(2), which most retention policies ignore. A dispute adds four years, or runs until it is finally settled, whichever is later. An ongoing tax audit adds four years, as does a notice that the authority intends to audit served before the original period expires. A voluntary disclosure filed in the fifth year after the relevant tax period adds one year from the date you submit it.

Read together, the practical rule for a free zone company holding no property fits on one line: keep everything for seven years, and treat the clock as paused while anything is open with the authority. With real estate in the picture, plan on fifteen.

Who needs audited financial statements

Ministerial Decision No. 84 of 2025, issued on 25 March 2025, names two categories that must prepare and maintain audited financial statements. The first is a taxable person that is not a tax group and derives revenue above AED 50 million in the relevant tax period. The second is a Qualifying Free Zone Person, with no revenue threshold attached at all.

That second category catches people. A free zone company turning over AED 900,000 a year and claiming the zero per cent rate needs a full audit. A mainland company turning over AED 40 million does not, as far as the tax law is concerned. The decision applies to tax periods commencing on or after 1 January 2025 and replaces Ministerial Decision No. 82 of 2023, which still governs earlier periods.

Your free zone authority sets its own requirement on top, with its own deadline. DMCC guidelines, last updated 29 April 2025, require a member company to upload the audited financial statements and a signed and stamped summary sheet through the Member Portal within six months of each financial year end, from an auditor on DMCC’s Approved Auditors List. Rules differ across the free zones, so read your own licence conditions rather than assuming the tax position covers you.

The choice between the zero per cent rate and Small Business Relief

This fork decides how much bookkeeping a small free zone company needs, and it is easy to miss. Article 3 of Ministerial Decision No. 73 of 2023 states that a resident person electing Small Business Relief must not be a Qualifying Free Zone Person. The two are mutually exclusive.

So a free zone company under AED 3 million in revenue has a genuine decision to make. Claim QFZP status and you take zero per cent on qualifying income, but you must hold adequate substance, comply with the transfer pricing documentation rules in Article 55 of the Corporate Tax Law, and commission an audit every year. Elect Small Business Relief instead and you are treated as having no taxable income for the period, with lighter compliance and no audit required by tax law, but you give up the QFZP route for that period and cannot carry forward losses incurred in it.

Article 18(2) sharpens the point. A Qualifying Free Zone Person that fails any condition at any time during a tax period stops being one from the beginning of that period, not from the date it slipped. An audit commissioned late is not a small administrative problem.

The relief also runs longer than most published advice says. Ministerial Decision No. 131 of 2026, issued on 29 July 2026, replaced the clause that had capped the AED 3 million threshold at tax periods ending on or before 31 December 2026. The threshold now applies to tax periods ending on or before 31 December 2029, which the Ministry of Finance confirmed in an announcement on 7 August 2026. Articles written before last summer still carry the old date.

Which accounting standard a small FZE should apply

Ministerial Decision No. 114 of 2023, published on 9 May 2023, settles this in two short articles. Article 4 requires a taxable person to apply International Financial Reporting Standards, and permits a taxable person with revenue of AED 50 million or less to apply IFRS for SMEs instead. Article 2 allows financial statements on a cash basis where revenue does not exceed AED 3 million, or in exceptional circumstances on application to the authority.

For a one-person consultancy or a small trading company, IFRS for SMEs is usually the sensible setting, and most cloud accounting packages handle it without special configuration. The cash basis looks attractive because it is simpler, and for a service company paid on completion it often is. It becomes awkward once you hold inventory or invoice well ahead of payment.

Electronic records, and the Arabic clause nobody plans for

Article 4 of Cabinet Decision No. 74 of 2023 permits a fully digital archive. You can meet the obligation by keeping the originals, or by keeping the information they contain, provided it is identical to the original, held as a photocopy or electronic copy reproducible in easily readable form on request, and stored so the authority can verify your obligations. Scanning and shredding is allowed. Scanning badly is not.

The clause that catches English-speaking owners sits in the penalty schedule rather than the record rules. Failure to submit tax-related data, records and documents in Arabic when the authority requests them carries AED 5,000, under Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 129 of 2025, which took effect on 14 April 2026 and cut that penalty from AED 20,000. Your books can be kept in English. If the request comes, translation is on you and the clock is short, which is a cheaper problem to solve when contracts and invoice templates were built bilingual from the start.

What the penalties actually are

The first row of the penalty table in Cabinet Decision No. 75 of 2023, which took effect on 1 August 2023, covers failure to keep the records required by the Tax Procedures Law and the Corporate Tax Law. The penalty is AED 10,000 for each violation, rising to AED 20,000 for a repeated violation within 24 months of the last one. Worth knowing that the parallel schedule for VAT, excise and tax procedures moved the other way: Cabinet Decision No. 129 of 2025, in force from 14 April 2026, cut the record keeping penalty there to AED 1,000 per violation. It amended Cabinet Decision No. 40 of 2017 and did not touch the corporate tax schedule, so the two sit at different amounts and which one bites depends on which obligation you missed.

Those figures are modest next to the second-order cost. Records prove qualifying income, substance and the arm’s length basis of related party dealings. A company that cannot evidence QFZP status for a period faces nine per cent on income it had treated as exempt, years after the fact.

E-invoicing moves the deadline closer than it looks

Ministerial Decision No. 244 of 2025, issued on 17 September 2025, sets the timetable for the UAE electronic invoicing system, and it changes how invoice records are created rather than just how they are stored. The pilot programme commenced on 1 July 2026, and voluntary implementation opened the same day.

Mandatory dates run in phases. A person with revenue of AED 50 million or more must appoint an accredited service provider by 30 October 2026, a date the Ministry of Finance extended from the original 31 July 2026 in an amendment reported on 10 May 2026, and must implement by 1 January 2027, which did not move. Below AED 50 million, which covers most free zone companies, the provider must be appointed by 31 March 2027 and the system implemented by 1 July 2027. Government entities follow by 1 October 2027. Business-to-consumer transactions sit outside the system until a further ministerial decision says otherwise.

The appointment date is the one to plan around, because it is roughly six months away and it forces a decision about your invoicing stack. A company still raising invoices by hand in a spreadsheet has more work ahead than one already issuing from an accounting system with an API.

A monthly close that takes a morning

For a single-owner FZE this work is small monthly and painful in March. A workable routine looks like this.

Reconcile every bank and payment account to the ledger, including the personal card used for that one supplier payment.
File sales invoices and purchase invoices against the transactions they match, with the contract or purchase order attached where one exists.
Record anything you decided rather than booked, such as why a trip was a business cost, in a short dated note saved with the month.
Check that related party transactions are listed separately, because Article 55 compliance is a QFZP condition and reconstructing those a year later is slow.
Update the fixed asset and inventory records that Cabinet Decision No. 74 of 2023 names directly.
Confirm the backup of the document archive actually restores, not merely that it ran.

Two habits save the most time later. Name files so a stranger can find them without you, and keep the tax period aligned to the financial year you told the free zone about. Article 57 of the Corporate Tax Law defines the tax period as the financial year, being the Gregorian calendar year or the twelve-month period for which you prepare financial statements.

Figures, thresholds and dates here are indicative, taken from the published legislation as it stood on 7 October 2026, and this article is not tax or legal advice. Decisions are amended regularly, as Ministerial Decision No. 131 of 2026 shows, so confirm the current position before acting. If you would like the record keeping, the audit position and the corporate tax and VAT registration reviewed together for an existing or new free zone company, our Dubai team can go through it with you.

Cover photo: Dubai – Downtown – Business Bay – وسط المدينة – الخليج التجاري – panoramio by Edgar El, via Wikimedia Commons (CC BY 3.0).