The Federal Tax Authority (FTA) has announced that businesses must complete Corporate Tax registration within 90 days from the Date of Incorporation / MOA.
Business success depends on more than just profits — effective document management, resilience and risk-management also play a vital role.The proper and efficient management of many things is essential for a business to be successful, including market research, document management, resilience, and risk management.
In the UAE, efficient document‐retention practices are fundamental to both business success and regulatory compliance. These documents include VAT records, contractual records, compliance records, employee records, corporate tax records, etc. There are several laws and regulations governing document retention, making it difficult to navigate them all. In this blog, we will discuss UAE's document retention policy.
Documents
VAT Records
To adhere to VAT regulations in the UAE, businesses must maintain detailed accounts and records. These records must be preserved for at least five years from the end of the relevant tax period.
VAT records relating to capital assets (for example, machinery) must be retained for ten years from the end of the relevant tax period. Documents associated with real-estate transactions are recommended to be kept for at least fifteen years — reflecting the long-term nature of property dealings.
Corporate Tax Records
In alignment with the newly implemented corporate tax law in the UAE, effective from June 1, 2023, taxpayers are mandated to compile and safeguard financial statements for the accurate computation of their taxable income. It is equally imperative to retain all supporting documents and records validating the information presented in the Corporate Tax return or any other submissions made to the Authority. Individuals or entities benefiting from tax exemptions must uphold records substantiating their exempt status.
These records must be retained for at least seven years from the end of the relevant tax period.
Employee Records
Effectively managing human resources goes hand in hand with adhering to labor regulations, and employee records are central to this process. In the UAE, it is prudent to retain employee records — including payroll details, timesheets and performance appraisals — for at least seven years after an employee leaves the company. In specific scenarios such as work-related accidents or filed claims against the business, a recommended practice is to retain records for up to 10 years after the resolution of the claim. This ensures not only smooth human resource management but also compliance with relevant regulations.
Contractual Records
Ensuring the proper retention of contractual records is important for keeping agreements and safeguarding the interests of involved parties. Records such as purchase orders, sales contracts, and leases should be securely stored for a minimum of 7 years after the contract's conclusion. This facilitates future reference and potential resolution of any disputes that may arise.
Compliance Records
Maintaining compliance records is crucial for meeting industry-specific regulations and upholding legal standards. Documents like environmental permits and safety records should be retained for the duration that the company remains subject to the pertinent regulations. This continuous record-keeping not only showcases ongoing compliance but also provides a historical point of reference during inspections or audits.
Ownership Records
Essential documents, such as business formation records, annual meeting minutes, by-laws, stock ledgers, and property deeds, merit permanent retention by businesses. This practice ensures a steadfast and enduring record of the company's establishment, governance, ownership structure, and valuable property assets. Keeping these documents serves as a reliable resource for future reference, compliance purposes, and comprehensive analysis.
Factors Influencing Document Retention
Maintaining documents involves determining the appropriate duration for retaining them. Numerous organizations establish a document retention policy that outlines guidelines for the retention period of various record types. Although legal requirements and industry regulations significantly influence document retention, the content of the information should also be a crucial determinant in deciding which files warrant preservation. The following are three factors that influence document retention.
- Business Size
Document retention periods are influenced by the scale of a business. Larger enterprises typically have more comprehensive record-keeping obligations owing to the scope of their operations, necessitating longer retention periods than those of smaller businesses. Comprehending the specific retention requirements tailored to the size of your business is crucial to ensuring compliance.
- Likelihood of Litigation
Businesses engaged in legal disputes might find it necessary to retain records for extended periods as potential evidence. In situations where litigation is highly probable, it's advisable to prolong the retention period to safeguard pertinent documents essential for legal proceedings.
- Industry or Zone
Retention periods for documents can vary across industries, with specific regulations mandating prolonged retention for certain records. For instance, financial institutions might be obligated to retain records for 7 years, while healthcare providers could face a requirement of 10 years or more. Moreover, companies operating within UAE free zones like Jebel Ali, Ras Al Khaimah, and the Dubai International Financial Centre (DIFC) must adhere to unique legal requirements within their respective zones.
- Operational Needs
The nature of a business's operations, including its structure, transactions, and communication practices, influences the types of documents generated. Understanding these operational needs are essential in determining how long to retain specific records for practical purposes
Need Help?
While businesses focus on their core operations, managing document retention and compliance can become complex. Given the variety of retention periods and industry-specific requirements, a trusted partner in document-management is invaluable. Reyson Badger, a top auditing and accounting firm in UAE, is here to help. We ensure your records are well-managed and compliant. Contact Reyson Badger for more information.
