New Rules on the Retention of Accounting Records and Commercial Books in the UAE

In the new era of taxation in the UAE, retaining accounting records and commercial bookkeeping is not something optional but a fundamental legal obligation. The FTA has recently issued Decision No. 04 of 2026 that establishes the framework that governs the way in which accounting records related to VAT and corporate tax are stored and retained.

The Federal Tax Authority requires UAE businesses to retain their “Accounting Data” and “Commercial Book Records” in accordance with the provided rules and regulations. Businesses are strictly required to maintain records that support their tax returns, including tax invoices, bank statements, general ledgers, payroll records, and filed returns for FTA audit.

The companies are permitted to store their records in digital, electronic, and photographic formats, provided they meet the new federal tax compliance requirements.

This decision allows the tax payers to keep accounting records and commercial books in the form of electronic copies or photocopies. However, the below conditions must be met to ensure acceptability of these records:

• Electronic copies or photocopies: A business must ensure that the electronic copy or photo copy is identical to the original document, contains all the data and information included in the original document, and has all the pages in the same order. Partial or incomplete copy will not be accepted.
• Quality and accessibility of the document: The records must be maintained in good quality, and should be readable and understandable. Upon request, FTA must be given access to all the records of the business, including password-protected or encrypted data.

Accounting Record-Keeping Requirements Under This Decision

• The accounting records and commercial books have to be intact, legible, and made readily available to the FTA upon demand. Further, ensure the provided information aligns with the original documents. 
• The information can be retained electronically or in image form under the condition that the provided information should not contradict the original documents.
• Records stored electronically should be organized to ensure they remain fully intact, legible and easily accessible for retrieval when required specifically for audit and compliance purposes.
• The FTA must be provided with access to electronically retained information upon request; this includes any encryption key or password required to access the system.
• The use of a third-party services provider (like outsourced accounting services) for the retention of the information is allowed. However, engaging a third-party does not exempt you from your legal responsibility to ensure the proper retention and integrity of the information.

Vertix Auditing’s Recommended Process for Retaining and Storing Records

Regardless of the size, industry, or jurisdiction, all companies must organize their record-keeping system according to the UAE Law and the Tax regulations. Here are steps to create an effective and efficient record retention and storage system:

Step 1: Categorize your Records

The first and most significant step in retaining information properly is to categorize your records. Following are the main sections and categories to be considered:

Accounting Records: The financial trial balance or raw financial data of day-to-day business operations.  It helps build financial statements, track the financial performance of a business, accurately file tax returns, and provides the information for financial audits. It may include:

• journals (whenever a transaction occurs, it is recorded here first),
• ledgers (a book of final entries),
• financial statements (summarized reports generated at the end of an accounting period) of a business.

Commercial books: these are official and systematic (physical or digital) records that businesses use to document their financial transactions, corporate decisions, and day-to-day operations. These books track the legal as well as structural governance of the company. These books serve evidentiary weight in disputes, helps in tax and audit compliance, and provide financial visibility. These are also required by external auditors during financial audits. The commercial books may include

• purchase orders,
• contracts,
• invoices,
• articles of incorporations,
• employment agreements, and
• Lease contracts, etc.

Supporting documents: Maintaining supporting documents is as important as keeping the accounting records and commercial books. The supporting documents help to maintain audit trail, financial integrity, compliance, and serves as tangible proof backing the financial statements. Supporting documents may include:

• Sales and purchase invoices,
• receipts,
• payment vouchers,
• Bank statements,
• Debit and credit notes
• payroll records,
• Loans and financing documents,
• Fixed assets purchases,
• Supporting workings related to corporate tax and VAT filing,
• Customs and import/export related documents,
• inventory records, etc.

Step 2: Determine the Storage Option

There are generally two options for storing records: physical storage and electronic storage.

Physical storage: You can retain original copies of your records physically – especially legally binding documents, certificates, or archival records. While doing so, you ensure the security and accessibility of documents when needed.

Digital Storage: Organizations no longer need to keep everything on paper; digital storage is a much safer and more efficient alternative. When keeping the records digitally, you must ensure that:

• All documents are complete and cover all the necessary information.
• The documents remain strictly unaltered, preserving the original data without edits.
• The records are readily accessible upon request by the FTA.
• Data is physically hosted on servers physically located in the UAE, unless an exception is approved.

Step 3: Manage Retention Period

The retention period varies depending on the jurisdiction and type of the records:

VAT records:  5 years from the end of the relevant tax period.

Corporate tax records: 7 years from the end of the relevant tax period.

Capital assets records: Up to 10 years depending on the assets.

Real estate related VAT documents: 15 years.

Step 4: Manage Backup and Security of the Records

To ensure the complete security of the records, it is advisable to establish both a strong on-site and cloud-based backup security option (if you can afford to have both). Furthermore, implement strict security protocols that involve data encryption and restricted access to ensure data integrity. This will ensure the data availability during audits and protect against data loss.

Cost and Space Management Solutions

Managing your records should not be too costly or become an administrative headache. Here are a few alternatives that will make record-keeping more efficient and effective:

• Shift to a digital system by scanning and saving documents digitally. Digital documents reduce physical storage costs, are easily accessible, and are a much safer option.
• For physical documents that need to be retained for a longer period of time, consider outsourcing to a third-party service provider.
• Use specialized software to track expiration dates and notify you when it is time to legally and safely discard outdated records, keeping your business clutter-free.

To Conclude   

Companies and businesses are required to evaluate their prevailing accounting records and commercial books retention systems and procedures. The authority strictly mandates that the digital record-keeping must be accurate and legible, unalterable and secure, and easily accessible for audit and compliance purposes. Although use of third-party services for retention of data is permitted, you are still held responsible for your business data.