The UAE practice glossary

The process of matching the bank account in the general ledger against the bank statement, so the book balance and the bank balance agree or every difference is explained. Regular reconciliation catches missing entries, duplicates, bank charges, and timing differences before they distort VAT returns or financial statements.

The structured list of every account a business posts to — assets, liabilities, equity, income, and expenses — usually organised with account codes. A well-designed chart makes VAT and Corporate Tax preparation easier, because taxable revenue, recoverable expenses, and adjustments already sit in their own accounts.

The UAE's federal tax on business profits, applying to financial years starting on or after 1 June 2023. The headline structure is 0% on taxable income up to AED 375,000 and 9% above that threshold, with separate rules for free zone persons and specific exemptions. Registration and filing run through EmaraTax; definitions vary by circumstance — verify with the FTA.

A document issued to reduce or cancel an invoice already issued — for returns, later-agreed discounts, or billing errors. Under UAE VAT, a registered supplier issues a tax credit note to adjust the output VAT previously charged, and both parties adjust their VAT accounting accordingly.

A fenced free zone with customs controls, listed by Cabinet Decision, that is treated as outside the UAE for certain VAT purposes. The treatment is narrower than many assume — it mainly affects the movement and supply of goods, while services generally follow normal VAT rules. Definitions vary by circumstance — verify with the FTA.

The accounting method in which every transaction is recorded twice — as a debit in one account and an equal credit in another — so the books always balance. It is the foundation for a trial balance, financial statements, and tax computations that can actually be traced and defended.

The Federal Tax Authority's online platform for tax registration, filing returns, making payments, and managing refunds and penalties. It replaced the FTA's earlier e-Services portal, and both VAT and Corporate Tax obligations are administered through it.

The identity card issued by the Federal Authority for Identity, Citizenship, Customs & Port Security (ICP) to UAE citizens and residents. Firms rely on it when verifying who a client's stakeholders are, and it carries an expiry date that practices need to track in their client records.

Supplies on which no VAT is charged and for which the supplier cannot recover the related input VAT — the key contrast with zero-rating. UAE examples commonly include certain financial services, subsequent supplies and leases of residential property, bare land, and local passenger transport. Definitions vary by circumstance — verify with the FTA.

The UAE federal body that administers VAT, Corporate Tax, and excise tax — handling registration, returns, refunds, audits, clarifications, and penalties. Its online portal is EmaraTax, and its published guides and public clarifications are the practical reference points for practitioners.

An economic zone in the UAE with its own licensing authority and regulations. For tax purposes, free zone status matters in two distinct ways: some zones are designated zones for VAT, and a free zone company may qualify as a Qualifying Free Zone Person for Corporate Tax — but neither follows automatically from holding a free zone licence. Verify each entity's position with the FTA.

The complete record of all accounts and postings for a business — every journal entry ultimately lands here. Financial statements, VAT returns, and Corporate Tax computations should all derive from the same general ledger, so the numbers reconcile with each other.

The VAT a registered business pays on its purchases and expenses. It is generally recoverable to the extent the costs relate to making taxable supplies; VAT on exempt activities and certain blocked categories is not recoverable. Recovery also depends on holding valid tax invoices.

The unit of recording in double-entry accounting: a dated set of debits and credits, with equal totals, that posts a transaction to the ledger. Everything from a sales invoice to a depreciation adjustment ultimately becomes a journal entry.

Know Your Customer and Anti-Money Laundering: the obligations to identify clients, understand who owns and controls them, and monitor for suspicious activity. In the UAE, accounting firms fall within the regulated DNFBP category (Designated Non-Financial Businesses and Professions), so client onboarding files — trade licences, Emirates IDs, UBO declarations — are a compliance requirement, not just good housekeeping.

A company's constitutional document, setting out its shareholders, share capital, activities, and management arrangements. Firms keep the MOA on file for KYC and rely on it to confirm who can sign for the company; changes such as new shareholders or activities mean an amended MOA.

The VAT a registered business charges on its own taxable supplies of goods and services. It is collected from customers and declared on the VAT return; output VAT less recoverable input VAT is broadly what is payable to the FTA for the period.

Closing an accounting period so that no further entries can be posted or edited within it — typically once a VAT return is filed or accounts are finalised. Locking protects filed figures from silent changes; later corrections go through new, dated adjustments instead of rewriting history.

A legal document authorising one person to act on behalf of another — signing contracts, dealing with authorities, or handling bank matters. In the UAE, POAs are commonly notarised, and firms keep them on file as evidence of who is authorised to act for a client entity.

A free zone entity that meets the Corporate Tax law's conditions — including maintaining adequate substance in the zone and earning qualifying income — and can therefore benefit from a 0% Corporate Tax rate on that qualifying income, with the 9% rate applying to other taxable income. The conditions are detailed and easy to fail. Definitions vary by circumstance — verify with the FTA.

A VAT mechanism where the recipient, rather than the supplier, accounts for the VAT on a supply. In the UAE it applies mainly to imports of goods and services from outside the state: the registered recipient self-accounts for output VAT on the import and, where entitled, recovers it as input VAT on the same return.

A Corporate Tax election that lets an eligible resident taxable person be treated as having no taxable income for a tax period, where revenue is AED 3,000,000 or less in that period and in all previous tax periods. As legislated, the relief is available for tax periods ending on or before 31 December 2026. Eligibility and elections carry conditions — verify with the FTA.

The span of time a tax return covers. For UAE VAT, the FTA assigns each registrant a tax period — commonly quarterly, with monthly periods for some larger businesses — while for Corporate Tax the tax period is generally the entity's financial year.

Broadly, the person or entity that is subject to a tax and its obligations. The precise meaning differs by regime: for VAT it centres on persons who are registered or required to register, while for Corporate Tax it covers the resident and non-resident persons brought within the law's scope. Definitions vary by circumstance — verify with the FTA.

The licence issued by an emirate's economic department or a free zone authority that permits a business to carry on its stated activities. It is a cornerstone KYC document, it defines what the business may lawfully do, and it expires — which is why licence expiry tracking is a standing task in UAE practices.

A listing of every ledger account with its debit or credit balance at a point in time. If total debits do not equal total credits, something is wrong in the books; when they do agree, the trial balance becomes the starting point for financial statements and tax computations.

The unique 15-digit number the FTA issues to a business on VAT registration. It must appear on tax invoices and tax credit notes, and checking a counterparty's TRN is a basic control before recovering input VAT on their invoices.

The natural person who ultimately owns or controls a company, directly or indirectly — commonly assessed against a 25% ownership or control threshold in UAE regulations. UAE companies are required to maintain beneficial-owner registers, and identifying UBOs is a core step in KYC/AML onboarding.

The UAE's tax on supplies of goods and services, in force since 1 January 2018 with a standard rate of 5%. Registered businesses charge output VAT, recover eligible input VAT, and pay the difference to the FTA. A supply can be standard-rated, zero-rated, exempt, or out of scope — and that classification drives the accounting.

The periodic declaration (Form VAT 201) filed through EmaraTax, summarising output VAT, input VAT, and the net amount payable or refundable for a tax period. Filing and payment are generally due within 28 days of the end of the tax period, and late filing or payment attracts penalties.

The UAE's electronic salary transfer system, operated through the Ministry of Human Resources and Emiratisation and the Central Bank, which requires covered employers to pay wages through approved channels so payment can be verified. Payroll for mainland clients generally has to line up with WPS files and timing; some free zones run their own arrangements.

Supplies that are taxable at a 0% VAT rate: no VAT is charged to the customer, but the supplier can still recover related input VAT — the key difference from exemption. UAE examples commonly include exports of goods and services, international transport, the first supply of new residential buildings, and certain education and healthcare supplies. Definitions vary by circumstance — verify with the FTA.