UAE Accounting, Tax & Audit Glossary

617 plain-English definitions of UAE finance, VAT, corporate tax, audit and compliance terms.

• Accounting Income, The net profit or loss shown in a business's financial statements, generally prepared under IFRS, before any tax-specific adjustments. Under UAE Corporate Tax, accounting income is the starting point that is then adjusted for exempt income, non-deductible expenses and reliefs to arrive at taxable income. Confirm the required accounting basis with the FTA.
• Accounting Standards for Corporate Tax, UAE Corporate Tax requires taxable income to be based on financial statements prepared under accepted accounting standards, generally IFRS, with IFRS for SMEs available below a revenue threshold. Smaller businesses may use the cash basis of accounting where permitted. Consistent standards are also needed to form a tax group. Confirm which basis and standards apply to you with the Federal Tax Authority.
• Accounts Payable, The money a business owes to its suppliers for goods or services received but not yet paid, recorded as a current liability on the balance sheet. Managing accounts payable well means paying on time to preserve supplier relationships and any discounts, while protecting cash flow. The supporting ledger lists each unpaid invoice by supplier and due date.
• Accounts Receivable, The money customers owe a business for goods or services delivered but not yet paid, recorded as a current asset on the balance sheet. Collecting receivables promptly is vital for cash flow, and ageing reports help track overdue invoices. Slow collection can strain working capital even when the business is profitable on paper.
• Accrual, Under accrual accounting, income and expenses are recognised when they are earned or incurred, not when cash changes hands. An accrual specifically records an expense or income that relates to the period but has not yet been invoiced or paid. This matching gives a truer picture of performance and is the basis required by IFRS for financial statements.
• Accruals Concept, The accruals concept requires transactions to be recognised when they occur, not when cash is exchanged. Income and expenses are recorded in the period to which they relate, giving a more faithful picture of performance and position. It is a fundamental assumption underlying IFRS financial statements alongside going concern.
• Accrued Expense, A cost a business has incurred during a period but not yet paid or been invoiced for, such as wages, utilities or interest owed at the period end. It is recognised as an expense and recorded as a liability so the accounts reflect obligations in the right period. It is effectively the opposite of a prepaid expense.
• Accrued Income, Revenue that a business has earned by providing goods or services but has not yet invoiced or received by the reporting date. Under the accrual basis it is recognised as income with a matching asset, so the financial statements reflect performance in the correct period rather than when cash is collected.
• Accrued Revenue, Income that a business has earned by delivering goods or services but has not yet invoiced or received payment for at the period end. Under accrual accounting it is recognised as revenue and recorded as an asset, often called accrued income, ensuring earnings appear in the correct period rather than only when cash arrives.
• Acid-Test Ratio, Another name for the quick ratio, comparing a company's most liquid assets, typically cash, short-term investments and receivables, with its current liabilities. It excludes inventory and prepayments to assess the ability to settle near-term debts without relying on selling stock, giving a conservative view of short-term financial health.
• Activity Code, A standardised code assigned to each permitted business activity in the UAE, used to define exactly what a licensed company may do. The economic departments and free zones maintain lists of these codes, and the chosen codes appear on the trade licence. They can affect approvals, visas and tax treatment. Confirm the correct activity codes for your business with the relevant authority.
• ADGM, Abu Dhabi Global Market, an international financial free zone on Al Maryah Island in Abu Dhabi. It operates under its own common-law framework, courts and regulator (the FSRA), directly applying English common law. It is a hub for banking, asset management and fintech. Confirm current corporate tax and regulatory rules with the FTA and FSRA.
• Administrative Penalty, A financial penalty imposed by the UAE Federal Tax Authority for breaches of tax law, such as late registration, late filing, late payment or incorrect returns. Penalty amounts and triggers are set out in Cabinet Decisions and can be substantial. The FTA has at times run penalty waiver or instalment schemes. Confirm current penalty rules and any relief with the FTA.
• Advance Pricing Agreement, An arrangement between a taxpayer and a tax authority that fixes, in advance, the transfer pricing method for specified related-party transactions over a set period, giving greater certainty. The UAE Corporate Tax law contemplates such agreements, with the process to be set out by the authorities. Availability and procedures may evolve, so confirm the current position with the Federal Tax Authority or Ministry of Finance.
• Adverse Opinion, The most serious audit conclusion, given when misstatements in the financial statements are both material and pervasive, meaning the accounts as a whole do not give a true and fair view. An adverse opinion tells users the statements cannot be relied upon and usually points to deep problems in accounting records, controls or management judgements.
• Amortised Cost, Amortised cost is a measurement basis under IFRS 9 for certain financial assets and liabilities. It is the initial amount adjusted for principal repayments and the cumulative amortisation of any difference between initial and maturity amounts, calculated using the effective interest method, and reduced by any loss allowance for impairment.
• Amortization, The systematic write-down of the cost of an intangible asset, such as software, licences or goodwill, over its useful life, mirroring how depreciation works for tangible assets. It matches the cost of using the asset to the periods that benefit. The term is also used for spreading loan repayments of principal and interest over time.
• Analytical Procedures, Analytical procedures evaluate financial information by studying plausible relationships among financial and non-financial data, such as ratios, trends and comparisons with expectations. Under the ISAs they are used in planning, as substantive tests, and in the final review to assess whether the statements are consistent with the auditor's understanding.
• Annual Leave (UAE), Paid yearly holiday that UAE private sector employees accrue under the Labour Law. Workers are generally entitled to 30 calendar days of paid leave per year once they have completed one year of service, with a pro-rated entitlement of two days per month for those with more than six months but under a year. Specific rules apply to carry-over and pay, so confirm details with MOHRE or a qualified adviser.
• Anti-Money Laundering, The framework of laws, controls and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate. In the UAE it is governed mainly by Federal Decree-Law No. 20 of 2018 and its amendments and regulations, and requires in-scope businesses to assess risk, perform due diligence and report suspicious activity. Confirm current obligations with the regulator.
• Arm's Length Principle, The transfer pricing standard requiring that transactions between related parties or connected persons be priced as if they were between independent parties dealing at market terms. UAE Corporate Tax applies this principle so that profits are not shifted artificially. Businesses may need to document how their pricing meets it. Confirm the requirements with the FTA.
• Arm's Length Principle (Corporate Tax), The requirement that transactions between related parties or connected persons be priced as if they were between independent parties acting freely. UAE Corporate Tax applies this principle through transfer pricing rules, and the FTA can adjust results that do not reflect market value. Supporting analysis and documentation may be required. Confirm how the arm's length principle applies to you with the FTA.
• Articles of Association (Term), The internal rulebook of a company, setting out how it is governed, including the powers of directors, decision-making, meetings and share dealings. In UAE free zones and joint stock companies the articles are a core constitutional document alongside or within the memorandum. They guide day-to-day governance. Required form varies by structure and zone, so confirm the content with the relevant authority or adviser.
• Asset Turnover Ratio, An efficiency measure calculated as revenue divided by average total assets, showing how many units of sales a company generates from each unit of assets. A higher ratio indicates assets are used productively to drive revenue. It varies widely by industry, with asset-heavy sectors typically reporting lower turnover than service businesses.
• Associate and the Equity Method, An associate is an entity over which an investor has significant influence, usually from holding 20 to 50 percent of voting power. Under IAS 28 it is accounted for using the equity method: the investment starts at cost and is adjusted for the investor's share of the associate's post-acquisition profits, losses and other equity changes.
• Attestation (UAE), The official verification of a document so it is recognised for use in the UAE, typically involving certification by authorities in the country of origin and then by UAE bodies. Educational certificates, commercial documents and personal papers often need attestation before they can be used for visas, licensing or contracts. Steps depend on the document and country, so confirm the process with the relevant authority or adviser.
• Audit Assertion, Audit assertions are the implicit or explicit claims management makes within the financial statements about transactions, balances and disclosures, such as existence, completeness, accuracy, valuation and rights and obligations. Auditors design procedures to gather evidence supporting each assertion, forming the basis for their opinion under the ISAs.
• Audit Engagement, The formal arrangement under which an audit firm is appointed to examine a company's financial statements, set out in an engagement letter that defines the scope, responsibilities, timing and fees. Establishing terms up front, along with the auditor's independence, helps the audit run smoothly and protects both the client and the firm from misunderstandings.
• Audit Engagement Letter, A written agreement that records the terms of an audit engagement between the auditor and the client before work begins. It sets out the objective and scope of the audit, the responsibilities of the auditor and of management, the applicable reporting framework, and the expected form of any reports, helping prevent misunderstandings.
• Audit Evidence, The information an auditor gathers and evaluates to support the audit opinion, including invoices, contracts, bank confirmations, physical inspection, recalculation and management representations. Evidence must be sufficient in quantity and appropriate in relevance and reliability. A strong audit trail in the accounting records makes gathering quality evidence faster and more reliable.
• Audit Opinion, The conclusion an external auditor expresses on whether financial statements are prepared, in all material respects, in line with the applicable framework such as IFRS. It is the heart of the audit report and can be unqualified, qualified, adverse or a disclaimer. Lenders, investors and licensing authorities rely on this opinion to trust a company's reported numbers.
• Audit Planning Memorandum, A document that summarises the overall audit strategy and detailed plan for an engagement. It records the auditor's understanding of the entity, assessed risks, materiality levels, the planned audit approach, resourcing and timing. Preparing it helps direct the team's effort to higher-risk areas and supports an efficient, effective audit.
• Audit Report, The formal document in which an external auditor communicates the scope of the audit and the opinion on the financial statements. It identifies the framework used, the responsibilities of management and auditor, and any key audit matters. In the UAE, licensing authorities and free zones often require this signed report as part of annual compliance and renewal.
• Audit Risk, The risk that an auditor expresses an inappropriate opinion when the financial statements are materially misstated. It is a function of the risk of material misstatement, comprising inherent and control risk, and detection risk. Auditors plan procedures to reduce audit risk to an acceptably low level.
• Audit Risk Model, A framework expressing audit risk as a function of the risk of material misstatement, made up of inherent risk and control risk, and detection risk, which the auditor controls through the nature, timing and extent of procedures. It guides auditors to perform more substantive work where the assessed risk of misstatement is higher.
• Audit Sampling, The application of audit procedures to less than 100% of items within a population so the auditor can draw conclusions about the whole. Items may be selected statistically or judgementally, allowing efficient testing while accepting a measured level of sampling risk that the sample may not represent the population.
• Audit Sampling Methods, Audit sampling applies procedures to less than one hundred percent of a population so conclusions can be drawn about the whole. Methods include statistical approaches such as random and monetary unit sampling, and non-statistical selection based on judgement. Sampling lets auditors gather sufficient evidence efficiently while managing sampling risk.
• Audit Trail, A complete, chronological record of transactions and supporting documents that lets an auditor trace any figure in the financial statements back to its source, and forward from source documents to the accounts. A strong audit trail improves transparency, supports tax filings and makes errors or fraud easier to detect and investigate.
• Audit Trail Testing, Procedures that follow a transaction through the complete chain of evidence, from the original source document through ledgers to the financial statements, or in reverse. A clear audit trail lets the auditor verify that recorded figures are supported and that no entries are unexplained, supporting both completeness and accuracy of the records.
• Bad Debt Relief, A VAT adjustment that lets a supplier recover output VAT already paid to the Federal Tax Authority (FTA) on a sale that the customer has not paid for. Conditions usually include that the debt is over a set age, has been written off in the accounts, and the customer has been notified. Confirm the current qualifying conditions and time limits with the FTA.
• Balance Sheet, A financial statement showing what a business owns and owes at a single date, setting out its assets, liabilities and equity. It reflects the accounting equation, where assets equal liabilities plus equity, and gives a snapshot of financial position. Together with the income statement and cash flow statement, it forms a complete set of accounts.
• Bank Guarantee, A commitment by a bank to pay a specified sum to a beneficiary if its customer fails to meet a contractual or financial obligation, commonly required in UAE for tenders, contracts, customs and rentals. It gives the beneficiary security against non-performance. The cost, collateral and wording depend on the case, so confirm the terms with the relevant bank.
• Bank Guarantee (Term), A written commitment by a bank to pay a beneficiary a set amount if the bank's customer fails to meet a contractual or financial obligation. In the UAE these are common in tenders, construction and trade, with types such as bid, performance and advance payment guarantees. They support credibility without tying up cash. Charges and conditions vary, so confirm the terms with your bank.
• Bank Reconciliation, The process of comparing a business's cash records with its bank statement to explain any differences, such as unpresented cheques, deposits in transit, charges or errors. Performing it regularly confirms the accuracy of recorded cash, helps detect fraud or omissions, and supports a reliable closing bank balance.
• Basic Earnings per Share, Basic earnings per share under IAS 33 is profit or loss attributable to ordinary shareholders of the parent divided by the weighted average number of ordinary shares outstanding during the period. It is a widely used measure of profitability per share and must be presented on the face of the statement of comprehensive income.
• Bill of Entry, A customs declaration document recording details of goods being imported into the UAE, including their value, quantity and classification, used to assess and clear duties before release. Often referred to as the customs declaration, it is a key record for VAT and customs compliance. Formats and procedures can change, so confirm the current requirements with the relevant authority.
• Blocked Input Tax, Input VAT that a business cannot recover even if it is registered, because the law specifically disallows it. In the UAE this can include VAT on certain entertainment costs and on motor vehicles available for personal use. Blocked input tax must be borne as a cost. Confirm exactly which expenses are blocked with the UAE Federal Tax Authority (FTA).
• Board of Directors, The group of directors appointed to manage and oversee a UAE company, set strategy and make major decisions within the powers given by the memorandum of association and company law. Boards are required or common in larger companies, regulated entities and those in the DIFC and ADGM. Directors owe duties of care and loyalty and can face liability for breaches.
• Board Resolution, A formal, documented decision taken by a company's directors or shareholders, recording approval of an action such as opening a bank account, appointing an auditor, changing capital or beginning liquidation. It provides evidence of proper authorisation and governance. UAE banks, authorities and counterparties often require a signed, and sometimes notarised, board resolution before acting on a company's instructions.
• Board Resolution (Term), A formal written decision passed by a company's board of directors recording an action such as opening a bank account, appointing a manager or approving a contract. In the UAE banks and authorities often request a board resolution, sometimes notarised or attested, to confirm the company has authorised a particular step. Format requirements vary, so confirm what is needed with the bank, authority or a qualified adviser.
• Bookkeeping, The systematic, day-to-day recording of a business's financial transactions, such as sales, purchases, receipts and payments, into the accounting records. Accurate bookkeeping is the foundation for financial statements, tax filings and audit, and in the UAE it underpins VAT and Corporate Tax compliance. Most modern bookkeeping uses cloud accounting software.
• Bookkeeping Cycle, The recurring sequence of steps for recording and processing transactions, from source documents and journal entries through posting to ledgers, preparing a trial balance and adjustments, to producing financial statements and closing the books. Following it consistently each period keeps records complete, accurate and reconcilable.
• Borrowing Cost Capitalisation, Under IAS 23, borrowing costs directly attributable to acquiring, constructing or producing a qualifying asset that takes a substantial time to get ready for use are added to the cost of that asset. Capitalisation starts when expenditure and borrowing costs are incurred, pauses during extended idle periods and ends when the asset is ready.
• Branch of a Foreign Company, An extension of an overseas parent company registered to do business in the UAE, carrying the same name and legal identity rather than forming a separate entity. A branch can usually conduct the parent's activities but cannot trade outside the scope approved in its licence. Mainland branches may need a local service agent. Confirm activity scope and agent rules with the relevant authority.
• Break-even Point, The level of sales at which total revenue exactly equals total costs, so the business makes neither a profit nor a loss. It is found by dividing fixed costs by the contribution per unit, the selling price less variable cost. Knowing the break-even point helps set prices, targets and the volume needed before profit begins.
• Budgeting, The process of planning expected income and expenditure for a future period and setting financial targets for the business or its departments. A budget acts as a roadmap and control tool, allocating resources and providing a benchmark against which actual results are later compared through variance analysis.
• Burn Rate, The pace at which a business consumes its cash reserves over a period, usually expressed as a monthly figure. It is especially relevant for early-stage or loss-making companies and, alongside available cash, helps estimate how long the business can operate before it needs additional funding or reaches profitability.
• Business Activity Code, A standardised code that classifies the commercial activities a UAE company is licensed to perform, selected when applying for or amending a trade licence with the relevant economic department or free zone authority. The chosen activities shape permitted operations, approvals and sometimes tax treatment. Carrying on an unlicensed activity can cause problems, so confirm codes with your licensing authority.
• Business Restructuring Relief, A UAE Corporate Tax relief that lets a business transfer all or an independent part of its operations to another taxable person on a tax-neutral basis, typically in mergers, spin-offs or reorganisations, where consideration is shares. Clawback can apply if conditions are breached within a set period. Confirm eligibility and the holding period with the Federal Tax Authority.
• Business Restructuring Relief, A UAE Corporate Tax relief that can defer tax on gains arising when a business, or an independent part of it, is transferred in exchange for shares during a merger, spin-off or similar reorganisation. It lets qualifying restructurings proceed on a tax-neutral basis, subject to conditions and clawback rules. Confirm eligibility and the conditions with the FTA.
• Cabinet Decision, A binding instrument issued by the UAE Cabinet that adds operative detail to federal laws, such as the Executive Regulations for VAT and Corporate Tax or thresholds and lists referenced in a decree-law. Cabinet Decisions carry significant legal weight and are frequently updated. Always check the latest version and effective date, as guidance can change between releases.
• Capital Allowance, A deduction allowed against taxable profits for the cost of qualifying business assets, given under tax rules in place of accounting depreciation, which is generally not deductible. The specific assets, rates and conditions depend on the applicable tax regime, so businesses should confirm treatment with the relevant tax authority.
• Capital Expenditure, CapEx is spending to acquire, upgrade or extend the life of long-term assets such as property, equipment, vehicles or technology, which provide benefits over several years. Rather than being fully expensed at once, capital expenditure is recorded as an asset and depreciated or amortised over its useful life, affecting both the balance sheet and profits.
• Capital Increase, Raising a UAE company's share capital, for example to bring in new investment, admit shareholders or meet a licensing or regulatory requirement. The process usually involves a shareholder resolution, amending the memorandum of association, depositing or evidencing the new funds and updating the trade licence and registers with the relevant economic department or free zone authority.
• Capital Reserve, A reserve within equity arising from capital transactions rather than normal trading profits, such as a share premium or a surplus on revaluation of assets. It is generally not available for distribution as ordinary dividends and is kept distinct from accumulated trading profits to preserve the company's capital base.
• Capitalised Development Costs, Under IAS 38, development costs are capitalised as an intangible asset once the entity can demonstrate technical feasibility, intention and ability to complete and use or sell it, probable future economic benefits, available resources and reliable cost measurement. Until those criteria are met, the spending must be expensed as incurred.
• Cash Conversion Cycle, A measure of how long it takes a business to turn investment in inventory and other resources back into cash. It equals days inventory held plus days sales outstanding minus days payable outstanding. A shorter cycle frees up working capital, while a longer cycle ties cash up in operations and can increase financing needs.
• Cash Flow, The movement of money into and out of a business over a period, split into operating, investing and financing activities. Positive cash flow means more cash is coming in than going out, supporting day-to-day operations and growth. A business can be profitable on paper yet still fail if it runs out of cash, so cash flow is closely monitored.
• Cash Flow Statement, A financial statement that explains the movement of cash into and out of a business over a period, split into operating, investing and financing activities. It reconciles opening and closing cash and shows how a profitable company can still face cash shortages. It completes the core financial statements alongside the balance sheet and income statement.
• Cash Ratio, The most conservative liquidity measure, dividing cash and cash equivalents by current liabilities. It ignores receivables and inventory to show what proportion of short-term obligations could be settled immediately using only cash on hand. A low cash ratio is common and is not necessarily a concern if other liquid assets are available.
• Cash Runway, The length of time a business can continue operating before it exhausts its cash, calculated by dividing available cash by the monthly burn rate. It is a key planning and going concern indicator, showing how long current funding will last and when fresh capital or a return to positive cash flow is needed.
• Cash-Generating Unit, A cash-generating unit, defined in IAS 36, is the smallest identifiable group of assets that generates cash inflows largely independent of those from other assets or groups. When an individual asset cannot be tested alone, impairment is assessed at the level of its cash-generating unit, and any loss is allocated across that unit.
• Certificate of Conformity, A document confirming that a product meets the applicable UAE technical regulations and standards, often required for regulated goods to be imported or sold. It is typically issued under a conformity-assessment scheme overseen by the Emirates Authority for Standardization and Metrology (ESMA, now part of the Ministry of Industry and Advanced Technology). Requirements depend on the product category.
• Certificate of Origin, An official document stating the country where goods were produced or manufactured, used in UAE trade to support customs clearance, claim preferential duty under trade agreements and meet buyer or import requirements. It is typically attested by a chamber of commerce or competent body. Requirements vary by destination and goods, so confirm them with the relevant authority.
• Change in Accounting Estimate, A change in accounting estimate under IAS 8 is an adjustment to the carrying amount of an asset or liability, or the periodic consumption of an asset, from new information or developments. Examples include revised useful lives or bad debt allowances. It is recognised prospectively in current and, where relevant, future periods.
• Change in Accounting Policy, Under IAS 8, an entity changes an accounting policy only if required by a standard or if the change gives reliable and more relevant information. Voluntary changes and those mandated without specific transition rules are generally applied retrospectively, as if the new policy had always been used, by restating comparative figures.
• Chart of Accounts, The organised list of all the accounts a business uses to record transactions, grouped into categories such as assets, liabilities, equity, income and expenses, each with a code. A well-designed chart of accounts keeps bookkeeping consistent, supports clear reporting and makes VAT and Corporate Tax analysis easier. It should be tailored to the company's activities.
• Cheque Bounce (UAE), When a cheque cannot be paid because the account lacks sufficient funds or has another defect. UAE reforms have largely decriminalised bounced cheques for insufficient funds, treating them more as a civil debt matter, while certain bad-faith cases can still carry penalties. Banks may partially honour cheques in some situations. The rules are evolving, so confirm the current treatment with a qualified adviser.
• Cheque Clearing, The process by which a cheque deposited in one UAE bank is presented to the payer's bank and the funds are settled, handled through the central bank's clearing system. Cheques remain widely used in UAE business and rent payments. A cheque can be returned for reasons such as insufficient funds, and bounced cheques can carry serious legal and financial consequences.
• Civil Company, A UAE mainland structure used by professionals such as consultants, accountants or engineers to practise together, typically formed under a civil company agreement and licensed by the relevant economic department. Partners are generally professionals in the same or related fields, and liability features differ from a commercial LLC. Confirm the permitted activities, ownership and licensing rules with your authority.
• Civil Company (UAE), A UAE business structure for professionals such as doctors, engineers, accountants and consultants who provide services based on their qualifications rather than trading goods. Partners share unlimited liability, and certain forms may require a local service agent. It is registered for professional activities with the local economic department. Confirm the structure and agent requirements with the relevant authority.
• Civil Liability Company, A professional company in the UAE where the partners practising the profession bear unlimited personal liability for the firm's professional obligations, unlike a limited liability company. It suits regulated professions such as legal, engineering and consultancy practices. The structure, ownership rules and any requirement for a local service agent depend on the emirate and the activity.
• Civil Transactions Law, The UAE's civil code, which sets out the general principles governing contracts, obligations, property and civil liability between private parties. It underpins much of commercial and personal dealing in the country and works alongside specialised laws such as the Commercial Companies Law. It has been updated over time to modernise certain provisions. For how it applies to a specific matter, consult a qualified legal adviser.
• Civil Work Company, A UAE company structure for professionals offering services based on intellectual or specialised skills, such as consultants, engineers, doctors and accountants. Owned by the practising professionals, it is licensed for civil or professional work rather than commercial trading and on the mainland has historically often involved a local service agent. Permitted activities are set by the licence.
• Commercial Agency, An arrangement under UAE law in which a local agent is appointed to distribute, sell or represent a foreign principal's products or services in the country, often with exclusive rights in a territory. Registered agencies under the Commercial Agencies Law can give the agent strong protections. The framework has been reformed in recent years. Confirm the current registration rules and effects with a qualified legal adviser.
• Commercial Agency Law, UAE legislation governing arrangements where a local agent or distributor is appointed to market or sell a foreign principal's products or services in the country. Registered commercial agencies have historically enjoyed strong protections, and the framework has been reformed in recent years. The rules are specialised and have transitional provisions, so confirm the current position with the Ministry of Economy or legal counsel.
• Commercial Companies Law, The principal UAE federal law governing the formation, ownership, management and dissolution of companies on the mainland, covering forms such as the LLC and joint stock company. Reforms have expanded foreign ownership for many activities and updated governance rules. Free zones often have their own company regulations. Provisions change over time, so confirm how the law applies with a qualified legal adviser.
• Commercial Licence, A UAE trade licence permitting a business to carry out commercial activities such as trading, buying and selling goods, import and export, logistics and general retail. It is one of the main licence types issued by the Department of Economic Development or a free zone authority and lists the specific activities allowed. Confirm the exact activities and conditions with the relevant authority.
• Commercial Permit, An authorisation allowing a defined commercial activity in the UAE, which may be a standalone permit or an activity listed on a trade licence. Some short-term or specific activities, such as events, promotions or temporary sales, require a separate permit from the relevant authority. The permit sets the scope and duration of what the holder is allowed to do.
• Company Liquidation, The formal process of closing a company, settling its debts, realising its assets, distributing any surplus to shareholders and removing it from the register. In the UAE it typically involves a shareholders' resolution, appointing a liquidator, obtaining clearances and cancelling the trade licence and visas. Steps vary by jurisdiction; confirm the current deregistration procedure with the relevant authority.
• Company Secretary, An officer responsible for a UAE company's governance administration, such as maintaining statutory registers, organising board and general assembly meetings, recording minutes and helping ensure regulatory filings are made on time. The role is more formalised in financial free zones like the DIFC and ADGM, while many mainland firms assign these duties to managers or external advisers.
• Completeness Assertion, The completeness assertion is the claim that all transactions, balances and disclosures that should be recorded have been included, with nothing omitted. Auditors test completeness to detect understatement, for example unrecorded liabilities or sales, often by tracing source documents forward into the accounting records and reviewing cut-off.
• Compliance Officer (MLRO), The designated person responsible for a business's AML programme, often called the Money Laundering Reporting Officer. They oversee policies, training, customer due diligence and risk assessment, and decide on and submit suspicious reports through goAML. UAE rules generally require in-scope businesses to appoint a suitably qualified compliance officer. Confirm the current appointment requirements with the regulator.
• Component Depreciation, Component depreciation under IAS 16 requires each significant part of an item of property, plant and equipment with a different useful life or pattern of benefit to be depreciated separately. For example, an aircraft's engines and airframe are depreciated apart, giving a more faithful allocation of the asset's cost over time.
• Comprehensive Income, Total comprehensive income under IAS 1 is the change in equity during a period from transactions and events other than those with owners. It combines profit or loss for the period with all items of other comprehensive income, giving a complete picture of an entity's recognised gains and losses in a single measure.
• Confirmation Procedure, An audit procedure that obtains evidence directly from a third party, such as a bank, customer or supplier, about a balance or condition. Because external confirmations come from sources independent of the entity, they are generally regarded as reliable evidence for assertions like the existence of receivables or the terms of borrowings.
• Connected Person, Under UAE Corporate Tax, a person connected to a business through ownership or management, such as an owner, director or officer, and their related parties. Payments to connected persons are deductible only if they meet the arm's length standard and reflect genuine business activity. Specific rules and exclusions apply. Confirm the detailed definition with the FTA.
• Connected Person (Corporate Tax), An individual or entity with a relationship to a taxable person, such as an owner, director or officer and their related parties, under UAE Corporate Tax. Payments or benefits to a connected person are only deductible if they reflect arm's length value and meet the wholly-and-exclusively test. The rules prevent profit extraction through inflated payments. Confirm who is a connected person with the FTA.
• Consolidation, The process of combining the financial statements of a parent and its subsidiaries into a single set of group accounts, presenting them as one economic entity. Under IFRS 10 it involves adding line items, eliminating intragroup balances and transactions, and recognising any non-controlling interest in the subsidiaries.
• Consolidation Procedures, Consolidation procedures under IFRS 10 combine a parent and its subsidiaries line by line, adding like items of assets, liabilities, equity, income and expenses. Intragroup balances, transactions and unrealised profits are eliminated, the carrying amount of the parent's investment is offset against its share of each subsidiary's equity, and non-controlling interests are presented separately.
• Contingent Liability, A possible obligation arising from past events whose existence depends on uncertain future events, or a present obligation that is not recognised because payment is not probable or cannot be measured reliably. Under IAS 37 it is disclosed in the notes rather than recorded, unless it becomes probable and measurable.
• Contra Entry, A bookkeeping entry that offsets two balances against each other, such as setting a receivable from a party against a payable to the same party, or moving cash between a business's own bank and cash accounts. It reduces both balances without affecting profit and must reflect a genuine right of set-off.
• Contract Asset, A contract asset arises under IFRS 15 when an entity has transferred goods or services to a customer but its right to payment is still conditional on something other than the passage of time, such as completing further work. It differs from a receivable, where the right to consideration has become unconditional.
• Contract Liability, A contract liability is an entity's obligation under IFRS 15 to transfer goods or services to a customer for which it has already received, or is entitled to receive, consideration. It commonly arises from advance payments or upfront billing and is released to revenue as the related performance obligations are satisfied.
• Contribution Margin Ratio, A measure equal to contribution, which is sales less variable costs, divided by sales, expressed as a percentage. It shows how much of each sales unit is available to cover fixed costs and contribute to profit. A higher ratio means more of every sale flows toward fixed costs and profit once the break-even point is passed.
• Control Account, A summary account in the general ledger whose balance equals the combined total of the individual accounts held in a related subsidiary ledger, for example total trade receivables or payables. It lets the financial statements show one figure while detailed records sit elsewhere, and it acts as an internal check on posting accuracy.
• Control Risk, The risk that a material misstatement could occur and not be prevented or detected on a timely basis by the entity's internal controls. Auditors assess it by understanding and testing controls; weaker controls mean higher control risk and require more substantive testing to keep overall audit risk acceptably low.
• Corporate Bank Account, A bank account opened in the name of a UAE company to receive income, pay suppliers and staff and manage business funds, kept separate from the owners' personal money. Opening one requires documents such as the trade licence and shareholder identification, plus passing the bank's compliance checks. Requirements vary by bank, so confirm them with the relevant institution.
• Corporate Bank Account (UAE), A bank account opened in the name of a UAE company to receive and make business payments, hold funds and access trade and treasury services. Banks apply know-your-customer and anti-money-laundering checks, reviewing the licence, ownership, activity and expected transactions before opening. Approval times and document requirements vary between banks. Confirm the criteria with your chosen bank or a qualified adviser.
• Corporate Nominee, An arrangement in which a company, rather than an individual, is appointed to hold a role such as a local service agent or local partner on behalf of a business in the UAE. Using a corporate nominee can offer continuity and a documented contractual relationship. The legality and structure depend on the activity and emirate, so confirm with the relevant authority.
• Corporate Tax, A federal tax on the net profits of businesses introduced under Federal Decree-Law No. 47 of 2022, applying to financial years starting on or after 1 June 2023. The headline rate is 9% on taxable income above AED 375,000 and 0% up to that amount, with relief for qualifying free zone persons. Confirm current rates and rules with the UAE Federal Tax Authority (FTA).
• Corporate Tax Deregistration, The process of cancelling a Corporate Tax registration with the UAE Federal Tax Authority, for example when a business ceases, is liquidated or no longer meets the criteria to be a taxable person. An application is made through EmaraTax within set timelines, and outstanding returns and tax must usually be settled first. Confirm the current conditions and deadlines with the FTA.
• Corporate Tax Deregistration, The process of cancelling a Corporate Tax registration with the UAE Federal Tax Authority when a business ceases, is liquidated or otherwise stops being a taxable person. The application must be made within the deadline after the triggering event, and all returns and liabilities must be settled first. Failing to deregister on time can lead to penalties. Confirm the deregistration steps with the FTA.
• Corporate Tax Period, The financial period for which a UAE taxable person calculates and reports Corporate Tax, usually the same as its financial year and normally 12 months. The first tax period begins with the first financial year starting on or after 1 June 2023. The return and payment deadlines run from the end of this period. Confirm your tax period with the FTA.
• Corporate Tax Registration, The process of registering a UAE business or taxable person with the FTA for Corporate Tax to obtain a Tax Registration Number. Taxable persons are generally required to register within set deadlines, even when their tax may be 0%, and then file annual returns. Confirm current registration deadlines and obligations directly with the FTA.
• Corporate Tax Registration, The process of enrolling a taxable person for UAE Corporate Tax with the Federal Tax Authority through EmaraTax to obtain a Corporate Tax registration number. Most taxable persons, including many free zone and exempt entities, must register within the deadlines set by FTA decisions, even where no tax is ultimately due. Late registration can attract penalties. Confirm your registration deadline with the FTA.
• Corporate Tax Registration Deadline, The date by which a taxable person must register for UAE Corporate Tax with the Federal Tax Authority through EmaraTax. The FTA has set staggered deadlines based on factors such as licence issue date, and missing them can trigger administrative penalties. Deadlines and categories are specific and have been updated, so confirm the deadline that applies to your business directly with the FTA.
• Corporate Tax Return, The annual filing a UAE taxable person submits to the Federal Tax Authority (FTA) reporting taxable income and the Corporate Tax due for a tax period. It is generally filed through EmaraTax within nine months of the end of the relevant tax period, and any tax is paid by the same deadline. Confirm your exact filing and payment dates with the FTA.
• Cost Center, A department, team or function within a business that incurs costs but does not directly generate revenue, such as HR, IT or finance. Tracking costs by cost centre helps managers monitor spending, set budgets and control expenses. Performance is judged mainly on staying within budget rather than on profit.
• Cost Model, The cost model under IAS 16 measures property, plant and equipment at cost less accumulated depreciation and any accumulated impairment losses. It is the alternative to the revaluation model and is widely used because it avoids the recurring valuations and disclosures that fair value measurement of fixed assets requires.
• Cost of Sales, The direct costs of producing or buying the goods and services a business has sold in a period, including materials, direct labour and related production overheads. Deducting cost of sales from revenue gives gross profit, and the figure depends partly on the inventory valuation method applied.
• Country-by-Country Report, An annual report that large multinational groups file showing, for each country, key figures such as revenue, profit, tax paid and employees, under OECD-based rules adopted by the UAE. It applies to groups whose consolidated revenue exceeds a high threshold and is filed by the ultimate parent or a surrogate. Thresholds and deadlines are specific, so confirm your obligations with the Ministry of Finance.
• Country-by-Country Reporting, A reporting requirement, abbreviated CbCR, under which large multinational groups report key financial and tax data for each country in which they operate. In the UAE it applies under Cabinet Decision No. 44 of 2020 to groups with consolidated revenue of at least AED 3.15 billion, with filing and notification duties. Confirm the current scope and deadlines with the authorities.
• Current Ratio, A liquidity measure calculated as current assets divided by current liabilities, showing whether a business has enough short-term resources to cover its short-term obligations. A ratio above 1 means current assets exceed current liabilities. What counts as healthy varies by industry, so it is best compared with peers and over time.
• Current Ratio (Liquidity), A liquidity measure calculated as current assets divided by current liabilities that shows whether short-term resources are enough to meet short-term obligations falling due within a year. A figure above one means current assets exceed current liabilities. What counts as healthy varies by sector, so it is best read alongside the quick ratio and trends.
• Current Tax, The amount of tax payable or recoverable on the taxable profit of the current period, measured using tax rates and laws enacted at the reporting date. Under IAS 12 it is recognised as an expense and a liability, and is reported separately from deferred tax, which reflects future temporary differences.
• Current versus Non-Current Classification, IAS 1 requires assets and liabilities to be split between current and non-current on the statement of financial position. An item is current if expected to be settled or realised within the operating cycle or twelve months, or held for trading; all others are non-current. The split helps users assess liquidity and solvency.
• Customer Due Diligence, The AML process of identifying and verifying who a customer is, understanding the nature of the relationship and assessing the risk it presents. CDD includes identifying beneficial owners and applying enhanced measures for higher-risk customers, alongside ongoing monitoring. It is a core obligation for UAE financial institutions and DNFBPs. Confirm current requirements with the regulator.
• Customs Bond, A financial guarantee, often a bank guarantee or deposit, lodged with UAE customs to secure potential duties and obligations, for example for goods moving under temporary admission, transit or warehousing. The bond can be released or refunded once the goods are re-exported, duties are paid or the customs procedure is properly closed. Requirements vary by procedure and customs authority.
• Customs Duty (UAE), A tax charged on goods imported into the UAE, applied under the GCC Common Customs Law and collected by the relevant customs authority at the point of entry. The standard rate on most goods is 5% of the customs value, with some goods exempt and others, such as tobacco and alcohol, taxed higher. Confirm rates, valuation and exemptions with the customs authority.
• Customs Duty Exemption, Relief from UAE customs duty available for certain goods or situations, such as qualifying imports into free zones, specific GCC-origin goods, and particular categories defined by the customs authorities. Exemptions usually require supporting documents and compliance with conditions, and may be lost if goods enter the local market. Treatment varies by case. Confirm whether an exemption applies with UAE Customs.
• Customs Import Declaration, The formal declaration lodged with UAE Customs when goods are brought into the country, setting out their description, value, origin and classification so duty and import VAT can be assessed. It is supported by documents such as the invoice and bill of entry, and links to the importer's customs registration. Accurate declarations avoid delays and penalties. Confirm declaration requirements with UAE Customs.
• Customs Registration, The process of registering a business with the relevant UAE customs authority so it can legally import and export goods, resulting in a customs client code linked to the trade licence. It is needed before clearing shipments through ports and airports. Each emirate's customs department manages its own registration, so confirm the steps and documents with the relevant authority.
• Cut-off Testing, Audit work that checks whether transactions are recorded in the correct accounting period around the reporting date. By examining items such as sales, purchases and inventory movements just before and after the year end, the auditor confirms revenue and expenses fall in the right period and that assets and liabilities are not over or understated.
• Data Protection Law (UAE), The framework governing how personal data is collected, used and shared in the UAE, anchored by the federal Personal Data Protection Law and supported by sector and free zone regimes. It sets principles such as lawful processing, consent where required and data subject rights. Certain free zones have their own laws. Confirm which regime applies to your business and its detailed obligations.
• Days Payable Outstanding, An efficiency measure showing the average number of days a business takes to pay its suppliers, calculated as average trade payables divided by credit purchases, multiplied by the number of days in the period. A higher figure means the company holds onto cash longer, which can aid liquidity but may strain supplier relationships if stretched too far.
• Days Sales Outstanding, An efficiency measure showing the average number of days a business takes to collect cash from credit customers, calculated as average trade receivables divided by credit sales, multiplied by the number of days in the period. A lower figure indicates faster collection and stronger cash flow, while a rising trend can warn of credit control problems.
• De Minimis Qualifying Income, A test that lets a qualifying free zone person keep the zero percent UAE Corporate Tax rate even with some non-qualifying revenue, as long as that revenue stays below both a percentage of total revenue and an absolute cap set in the rules. Breaching the threshold can cause the person to lose qualifying status. Confirm the current limits and what counts with the Federal Tax Authority.
• De Minimis Requirement, A condition that a qualifying free zone person's non-qualifying revenue stays within a small limit, broadly the lower of 5% of total revenue or AED 5 million, to keep the 0% UAE Corporate Tax rate on qualifying income. Breaching it can cause the whole income to be taxed at 9%. The thresholds are detailed and can change; confirm the current de minimis rules with the FTA.
• De Minimis Rule (Free Zone, Corporate Tax), A threshold test that lets a Qualifying Free Zone Person earn a limited amount of non-qualifying revenue without losing its 0% Corporate Tax status. If non-qualifying revenue stays within the prescribed limit, defined by reference to total revenue or an absolute cap, the benefit can continue. Breaching it can affect the whole zone status. Confirm the current de minimis limits with the FTA.
• Debt-to-Equity Ratio, A gearing measure calculated as total debt divided by shareholders' equity, showing how far a company is financed by borrowings relative to owners' funds. A higher ratio indicates greater reliance on debt and higher financial risk, though acceptable levels depend on the industry, the stability of earnings and prevailing interest rates.
• Deductible Expenditure (Corporate Tax), Business expenses that can be subtracted from income when calculating UAE Corporate Tax. To be deductible, costs must generally be incurred wholly and exclusively for the business and not be capital in nature or specifically disallowed. Certain expenses, such as some interest and entertainment, face limits. Proper records support deductions. Confirm what is deductible for your business with the FTA.
• Deemed Supply, A situation where UAE VAT law treats a transaction as a taxable supply even though no normal sale took place, so output VAT may still be due. Common examples include business assets put to private use, goods given away, or assets retained after deregistration where input tax was recovered. Specific conditions and exceptions apply. Confirm how deemed supply rules affect you with the FTA.
• Deferred Income, Income received or invoiced in advance of delivering the related goods or services, recognised as a liability and released to revenue as the obligation is satisfied. It applies the accrual and revenue recognition principles so that earnings are reported in the period the performance actually occurs, not when cash arrives.
• Deferred Revenue, Money a business has received from customers for goods or services it has not yet delivered, such as advance payments or subscriptions. It is recorded as a liability rather than income, because the obligation to provide the service remains. The amount is recognised as revenue gradually as the goods or services are delivered.
• Deferred Revenue Recognition, Deferred revenue recognition is the process of holding amounts billed or received in advance as a liability until the related goods or services are delivered. Under IFRS 15, revenue is only recognised as performance obligations are satisfied, so cash collected early sits on the balance sheet rather than being booked straight to profit.
• Deferred Tax, An accounting adjustment under IAS 12 recognising the future tax effect of temporary differences between the carrying amounts of assets and liabilities and their tax bases. It produces deferred tax assets or liabilities so that tax expense is matched to the related accounting profit rather than only the current tax payable.
• Deferred Tax Asset, A deferred tax asset arises under IAS 12 from deductible temporary differences, unused tax losses or credits expected to reduce future tax. It is recognised only to the extent that future taxable profits are probable. With UAE Corporate Tax in effect, in-scope entities may recognise deferred tax assets; confirm treatment with the FTA or an adviser.
• Deferred Tax Liability, A deferred tax liability arises under IAS 12 from taxable temporary differences that will increase tax payable in future periods, for example when asset carrying amounts exceed their tax bases. It is measured using enacted or substantively enacted rates expected to apply when the difference reverses, and is recognised in full for most differences.
• Deferred Tax Temporary Difference, A temporary difference under IAS 12 is the gap between the carrying amount of an asset or liability and its tax base, which reverses in future periods. Taxable temporary differences create deferred tax liabilities and deductible ones create deferred tax assets, recognising the future tax effect of items already in the accounts.
• Defined Benefit Plan, A defined benefit plan under IAS 19 promises employees a specified post-employment benefit, often based on salary and years of service, leaving the employer to bear actuarial and investment risk. The net obligation is measured using the projected unit credit method, with remeasurements recognised in other comprehensive income.
• Defined Contribution Plan, A defined contribution plan under IAS 19 is a post-employment arrangement where the employer pays fixed contributions into a separate fund and has no obligation to pay further amounts if the fund cannot meet benefits. The investment risk rests with the employee, and the employer simply expenses contributions as service is rendered.
• Department of Economic Development (DED), The emirate-level authority that licenses and regulates mainland businesses, issuing trade licences, approving activities and trade names and maintaining the commercial register. Each emirate has its own DED, and some have been rebranded, such as Dubai's Department of Economy and Tourism. Procedures and fees vary by emirate, so confirm the current rules with the relevant DED.
• Department of Economy and Tourism (DET), Dubai's authority for licensing and regulating mainland economic activity and tourism, formerly known as the Dubai Department of Economic Development. It issues trade licences, approves business activities and oversees commercial compliance in the emirate. Other emirates have their own equivalent departments. Confirm Dubai licensing requirements, activities and fees directly with the DET.
• Depreciation, The systematic allocation of the cost of a tangible fixed asset, such as machinery, vehicles or equipment, over its useful life to reflect wear and use. It spreads the expense across the periods that benefit, rather than charging it all at once, and reduces the asset's carrying value on the balance sheet while affecting reported profit.
• Designated Zone, A specific fenced free zone listed by Cabinet Decision and treated, for some VAT purposes, as outside the UAE for goods. Supplies of goods within or between designated zones may fall outside VAT if conditions are met, though services are usually treated normally. Not all free zones qualify. Confirm whether a zone is a designated zone with the FTA.
• Designated Zone List, For VAT, the list of fenced free zones treated, subject to conditions, as outside the UAE for certain supplies of goods. A designated zone must meet criteria set in a Cabinet Decision and be specifically listed. The treatment is technical and differs from Corporate Tax free zone rules. Always confirm whether a zone is currently designated and how a supply is treated with the FTA.
• Detection Risk, The risk that an auditor's procedures fail to detect a material misstatement that exists in the financial statements. Unlike inherent and control risk, it is influenced by the auditor, who lowers it by performing more extensive or effective testing when the assessed risk of material misstatement is high.
• DEWA Connection, The process of connecting a Dubai premises to electricity and water through the Dubai Electricity and Water Authority. Businesses generally need a DEWA account for their office, shop or warehouse, supported by a tenancy contract and trade licence, and a security deposit usually applies. The connection is often a prerequisite for occupying premises and obtaining other approvals.
• DIFC, The Dubai International Financial Centre, a leading financial free zone in Dubai with its own independent common-law legal system, courts and regulator (the DFSA). It hosts banks, funds and professional firms and offers a distinct regulatory and tax environment. Confirm current corporate tax and regulatory treatment with the FTA and DFSA.
• Diluted Earnings per Share, Diluted earnings per share under IAS 33 adjusts basic EPS for the effect of all dilutive potential ordinary shares, such as convertible instruments, options and warrants, as if they had been converted. By assuming conversion, it shows the lowest earnings per share and warns users of possible future dilution to their stake.
• Disclaimer of Opinion, Issued when an auditor cannot obtain sufficient appropriate evidence and the possible effects of that limitation are both material and pervasive, so no opinion can be expressed on the financial statements. It differs from an adverse opinion, which states the accounts are wrong; a disclaimer states the auditor simply could not reach a conclusion.
• Dividend, A distribution of a company's profits to its shareholders, usually paid in cash and in proportion to the number of shares held. Dividends are paid out of retained or current profits at the discretion of the company, after obligations are met. They reward investors but reduce the cash and reserves retained in the business.
• Dividend Cover, A measure calculated as earnings per share divided by dividend per share, showing how many times a company's profit could pay its declared dividend. A higher cover suggests the dividend is well supported by earnings and more sustainable, while cover near one indicates most profit is being distributed, leaving little retained for reinvestment.
• Dividend Yield, An investment measure calculated as the annual dividend per share divided by the market price per share, expressed as a percentage. It shows the cash income an investor earns relative to the share price. A high yield can signal an attractive income or a falling share price, so it should be read together with dividend cover and growth.
• DNFBP, Designated Non-Financial Businesses and Professions are non-financial sectors brought within the UAE AML regime, commonly including real estate agents and brokers, dealers in precious metals and stones, certain corporate service providers, and independent accountants and auditors. DNFBPs must apply AML controls, register on goAML where required, and report suspicions. Confirm whether your business is in scope with the regulator.
• Documentary Collection, A trade-finance method where banks handle shipping and title documents to help complete an international sale, but without guaranteeing payment. The exporter's bank forwards documents to the importer's bank, which releases them against payment or acceptance of a bill of exchange. It is cheaper than a letter of credit but offers the exporter less security. It follows ICC collection rules.
• Documentary Credit, The formal name for a letter of credit, an irrevocable bank promise to pay against compliant trade documents under internationally recognised rules. In UAE import and export deals it gives the seller assurance of payment and the buyer assurance that goods were shipped as agreed before funds are released. Different types exist, such as confirmed and sight credits. Confirm the appropriate type with your bank.
• Double Taxation Agreement, A treaty between the UAE and another country that allocates taxing rights and aims to prevent the same income being taxed twice, often reducing withholding taxes on cross-border payments. The UAE has an extensive treaty network. Access usually depends on residency and conditions, sometimes evidenced by a tax residency certificate. Confirm whether a treaty applies and its terms with the Ministry of Finance.
• Double Taxation Agreement, A treaty between two countries that sets out which one can tax particular types of income, so the same income is not taxed twice. The UAE has an extensive network of such agreements. Benefits are often accessed using a Tax Residency Certificate. The terms vary by treaty. Confirm whether a treaty applies and how to claim relief with the FTA and your adviser.
• Double-entry, The standard bookkeeping method in which every transaction is recorded in at least two accounts, with total debits always equalling total credits. This built-in balance helps detect errors and produces the data needed for a trial balance and financial statements. Double-entry underpins virtually all modern accounting systems and reliable financial reporting.
• Dual Licence, An arrangement that allows a free zone company to also hold a mainland licence, letting it operate in the wider UAE market while keeping its free zone base. It is available through cooperation between certain free zones and the local economic department. Scope, eligible activities and conditions vary, so confirm the current dual-licence rules with the relevant authority.
• Dual Licence Corporate Tax Impact, How holding both a free zone licence and a mainland branch licence affects a company's UAE Corporate Tax position. Income attributable to a mainland permanent establishment or to non-qualifying activity is generally taxed at the standard rate, while only genuinely qualifying free zone income can keep the zero percent rate. Confirm how income should be split and taxed with the Federal Tax Authority.
• Dual-Use Goods, Items that have legitimate civilian uses but could also be used for military purposes or weapons, such as certain chemicals, electronics, software and technology. Trading these through the UAE is subject to export-control rules and usually requires authorisation from the competent national authority. Strict record-keeping and end-user checks generally apply to ensure goods are not diverted.
• E-Channel, An online immigration system in the UAE used by companies and individuals to apply for and manage entry permits, residence visas and related services without visiting a typing centre for every step. Registration usually requires a refundable deposit and links to the company's immigration file. Availability and procedures vary by emirate, so confirm the current setup with the relevant authority.
• E-Trader Licence, A licence aimed at individuals running home-based or social media businesses in the UAE, allowing them to sell products and services online under their own name. It is typically issued to UAE and GCC nationals resident in the relevant emirate and does not by itself grant a physical shop or visa quota. Eligibility and permitted activities are set by the issuing economic department.
• Earnings Before Interest and Tax (EBIT), A measure of profit from operations calculated as revenue less operating expenses, but before deducting interest and tax. It shows underlying operating performance independent of how a business is financed or taxed, making it useful for comparing companies with different capital structures or tax positions.
• Earnings Per Share, A profitability measure calculated as profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue. It shows the profit earned for each share and is a key input to valuation. Diluted earnings per share also reflects potential shares from instruments such as options and convertible securities.
• Economic Licence, The official licence that authorises a business to operate in a UAE emirate, issued by the relevant economic department for mainland firms or by the authority of the chosen free zone. It defines the legal form, permitted activities and validity period, and must be renewed periodically. Holding a valid economic licence is a prerequisite for most other business approvals and registrations.
• Economic Substance, The principle, reflected in UAE Economic Substance Regulations, that entities earning income from certain activities must demonstrate real operations in the UAE, such as staff, premises and decision-making, rather than existing only on paper. Relevant activities must file notifications and reports. Confirm current scope and reporting duties with UAE authorities.
• Economic Substance (Term), A requirement that UAE entities carrying on certain relevant activities, such as banking, insurance, holding company or intellectual property business, demonstrate genuine operations in the country, including adequate staff, premises and expenditure. Affected entities may need to file notifications and reports and meet a core income-generating activity test. Obligations depend on the activity, so confirm current duties with a qualified adviser.
• Economic Substance Regulations, UAE rules requiring entities that earn income from certain Relevant Activities to demonstrate genuine economic presence in the country, including being directed and managed here, conducting core income-generating activities locally, and having adequate staff, premises and expenditure. In-scope businesses must file and may face penalties for failure. Confirm current obligations with the relevant authority.
• Effective Interest Method, The effective interest method allocates interest income or expense over the relevant period using the rate that exactly discounts estimated future cash flows to the instrument's carrying amount. It spreads fees, premiums and discounts across the life of a financial instrument, giving a constant periodic rate of return rather than uneven recognition.
• Ejari, The Dubai system, regulated by the Dubai Land Department and RERA, for registering residential and commercial tenancy contracts. Registration makes a lease legally recognised and is often required for utilities, visas and business licensing. Other emirates run equivalent tenancy systems. Confirm current registration steps and fees with the relevant authority.
• Ejari Tenancy, The official registration of a tenancy contract in Dubai through the Ejari system run by the Dubai Land Department, which gives the lease legal standing. A registered tenancy is commonly needed to obtain or renew a trade licence and to process some visa and utility services. Other emirates have their own systems, so confirm the local requirement with the relevant authority.
• EmaraTax, The UAE Federal Tax Authority's online portal for managing tax affairs, including registration for VAT, Excise Tax and Corporate Tax, filing returns, making payments, claiming refunds and submitting voluntary disclosures. Businesses access most FTA services through an EmaraTax account. Keep login details and registered contact information current, and confirm the latest functions with the FTA.
• Emirates ID, The mandatory national identity card for UAE citizens and residents, issued by the Federal Authority for Identity, Citizenship, Customs and Port Security. It is used to access government and many private services, and its number links to residency status. Renewal is tied to visa validity. Confirm current application and renewal rules with the issuing authority.
• Emiratisation, A UAE government policy aimed at increasing the employment of Emirati nationals in the private sector. Through programmes such as Nafis, certain mainland companies above a set headcount must meet annual Emirati hiring targets or face monthly contributions for any shortfall. Targets and penalties are updated periodically. Confirm the current thresholds and obligations with MOHRE or a qualified adviser.
• Emphasis of Matter Paragraph, An emphasis of matter is a paragraph in an unmodified audit report that draws users' attention to something already properly presented or disclosed in the financial statements, such as a significant uncertainty. It does not modify the opinion but highlights a matter the auditor considers fundamental to users' understanding under the ISAs.
• Employee Benefit Obligation, An employee benefit obligation under IAS 19 is an entity's liability for benefits earned by employees in exchange for their service, covering short-term pay, post-employment pensions, other long-term benefits and termination payments. Measurement ranges from simple accruals for short-term items to actuarial valuation for defined benefit promises.
• Employment Contract (UAE), A written agreement between an employer and employee in the UAE private sector setting out duties, pay, working hours, leave and notice. Under the current labour law all private sector contracts are fixed-term and must be registered with the Ministry of Human Resources and Emiratisation. The contract governs the working relationship. Confirm the required form and terms with MOHRE or a qualified adviser.
• Employment Visa, A UAE residence visa sponsored by an employer that allows a foreign national to live and work legally for that company. The process usually involves an entry permit, a medical test, Emirates ID registration and visa stamping, alongside a work permit from the labour authority. Steps and timelines differ between mainland and free zones, so confirm them with the relevant authority.
• End of Service Gratuity Law, UAE labour rules entitling many private-sector employees to a lump-sum gratuity on leaving, generally calculated from length of service and final basic salary, subject to conditions in the labour law. Free zones such as DIFC operate alternative savings schemes. The calculation and eligibility are detailed and have changed over time, so confirm the current entitlements with MOHRE or the relevant authority.
• End-of-Service Gratuity, A lump sum that private sector employees in the UAE earn on leaving after at least one year of continuous service, based on their final basic salary and length of service. The current law uses 21 days' basic pay per year for the first five years and 30 days per year afterwards, with a cap. Deductions and rules can apply, so confirm the exact entitlement with MOHRE or a qualified adviser.
• Enterprise Value, A measure of a company's total value to all providers of capital, calculated as market capitalisation plus net debt and other claims such as minority interests, less cash and cash equivalents. It represents the cost of acquiring the whole business and is widely used in valuation multiples because it is independent of capital structure.
• Escrow Account, A regulated account in which funds are held by a neutral party and released only when agreed conditions are met, used in the UAE for transactions such as off-plan property purchases to protect buyers' payments. It adds security and oversight to higher-value deals. Rules differ by sector and emirate, so confirm the applicable escrow requirements with the relevant authority.
• ESR Notification, A short annual filing under UAE Economic Substance Regulations confirming whether a business carried on a Relevant Activity, whether it earned income from it, and its financial year. It is generally required even where no income was earned or an exemption is claimed, and missing it can trigger penalties. Confirm the current portal, deadlines and process with the relevant authority.
• ESR Report, A more detailed annual filing under UAE Economic Substance Regulations, generally required where a business earned income from a Relevant Activity and is not exempt. It demonstrates how the entity met the economic substance test for the period, supported by evidence of UAE-based management, activity, staff and expenditure. Confirm current deadlines and requirements with the relevant authority.
• Establishment Card, A card or registration that links a UAE company to the immigration and labour systems, enabling it to sponsor employees and process visas. Often called the immigration or company card, it is tied to the trade licence and must be renewed periodically. The exact name and issuing body vary by emirate and free zone, so confirm details with the relevant authority.
• Etisalat and du Business Services, Telecommunications and connectivity services from the UAE's main operators, Etisalat and du, that businesses use for internet, landlines, mobile plans and data connections. Setting up business services typically requires a valid trade licence and premises, and connectivity is often needed before a company can operate, accept card payments or complete other setup steps.
• Excise Designated Goods, The specific products subject to UAE Excise Tax because they are considered harmful to health or the environment. The list has included tobacco and tobacco products, energy drinks, carbonated drinks, sweetened drinks and certain electronic smoking devices and liquids. Rates differ by category and apply on top of any VAT. Confirm the current list of excise goods and rates with the FTA.
• Excise Tax, An indirect tax the UAE levies on specific goods considered harmful to health or the environment, such as tobacco products, energy drinks, carbonated drinks and certain sweetened or vaping products. Rates differ by product and the tax is administered by the Federal Tax Authority (FTA). Confirm the current list of excise goods and the applicable rates with the FTA.
• Excise Tax Registration, The mandatory enrolment with the UAE Federal Tax Authority required of businesses that import, produce, stockpile or release excise goods from a designated zone. Registration is completed through EmaraTax, after which the business must file excise returns and pay the tax due. There is generally no registration threshold for excise activities. Confirm whether you must register for excise with the FTA.
• Excluded Activity, Under the UAE Corporate Tax free zone rules, a category of activity whose income does not qualify for the 0% rate even if carried on by a qualifying free zone person, such as certain transactions with natural persons or specified regulated activities. Earning more than allowed from excluded activities can affect qualifying status. Confirm the current excluded activities with the Federal Tax Authority.
• Excluded Activity (Free Zone), An activity that cannot earn the zero percent UAE Corporate Tax rate for a qualifying free zone person, even if carried on inside a free zone. Examples in the rules include certain transactions with natural persons, some banking, insurance and finance activities, and income from immovable property other than commercial property used in the zone. Confirm the current excluded list with the Federal Tax Authority.
• Exempt Income (Corporate Tax), Categories of income that are excluded from UAE Corporate Tax under Federal Decree-Law No. 47, so they are removed when calculating taxable income. These can include qualifying dividends and certain participation gains, and income of a foreign permanent establishment where an election applies. Conditions must be met for each category. Confirm whether your income is exempt with the FTA.
• Exempt Person (Corporate Tax), An entity that is outside the scope of UAE Corporate Tax, either automatically or by application and approval. Categories can include government entities, certain government-controlled entities, qualifying public benefit entities, qualifying investment funds and some pension or social security funds. Conditions apply. Confirm whether an entity qualifies as exempt with the FTA.
• Exempt Supply, A supply that falls outside the scope of VAT, so no VAT is charged on it. In the UAE this can include certain financial services, residential property leases and local passenger transport. Unlike zero-rated supplies, input VAT linked to exempt supplies is generally not recoverable. Confirm the current categories and recovery rules with the FTA.
• Existence Assertion, The existence assertion is the claim that recorded assets, liabilities and transactions actually exist at the reporting date. Auditors test existence to detect overstatement, for example fictitious sales or assets, typically by vouching recorded amounts back to supporting evidence such as confirmations, inspection or physical verification.
• Expected Credit Loss, Expected credit loss is the forward-looking impairment model under IFRS 9 for financial assets such as receivables and loans. Rather than waiting for a default to occur, entities estimate probable future losses using historical data, current conditions and reasonable forecasts, recognising a loss allowance earlier to reflect credit risk.
• External Approval, An additional clearance required from a government body or regulator beyond the main licensing authority for activities that are controlled or specialised, such as health, food, education, security or financial services. These approvals are obtained before or alongside the trade licence. The bodies involved depend on the activity, so confirm which approvals you need with the relevant authority.
• External Approval (UAE), An additional consent required from a government body other than the main licensing authority before certain UAE activities can be licensed. Examples include approvals from health, transport, education or industry regulators depending on the activity. These are usually needed alongside initial approval. The list of bodies varies by activity, so confirm which external approvals apply with the relevant authority.
• External Audit, An independent examination of a company's financial statements by a qualified audit firm that is separate from the business. The auditor gathers evidence and issues an opinion on whether the accounts give a true and fair view. In the UAE, many free zone companies must file an external audit to renew their licence; confirm current requirements with your authority.
• Fair Value, The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. IFRS 13 sets out a framework using a hierarchy of inputs, from quoted market prices to unobservable estimates, to measure fair value consistently and transparently.
• Fair Value Hierarchy, The fair value hierarchy in IFRS 13 categorises the inputs used to measure fair value into three levels, prioritising observable market data over entity-specific assumptions. It drives disclosure about how reliable a fair value measurement is, with greater transparency required as measurements rely more on unobservable inputs lower in the hierarchy.
• Family Foundation, A foundation, trust or similar entity set up to manage assets for the benefit of identified individuals or a public benefit purpose. Under UAE Corporate Tax it can apply to be treated as a transparent unincorporated partnership, so income flows through to the founders or beneficiaries instead of being taxed at the foundation level. Confirm the application process with the Federal Tax Authority.
• Federal Authority for Identity and Citizenship (ICA), The UAE federal authority responsible for identity, citizenship, passports, entry permits and residency matters, including Emirates ID and certain visa services that complement the immigration roles of emirate-level bodies. Businesses interact with it for some employee documentation and entry procedures. Services and channels change, so confirm the current requirements and processes with the ICA.
• Federal Decree-Law No. 47 of 2022, The UAE Corporate Tax law, which introduced a federal tax on the profits of businesses and certain individuals carrying on business activities. It sets out who is a taxable person, the tax rates, exemptions, free zone treatment and filing duties. Supporting Cabinet and Ministerial Decisions add detail. Confirm how it applies to your business with the Federal Tax Authority.
• Federal Decree-Law No. 8 of 2017 (VAT), The UAE Value Added Tax law, which introduced a 5% standard rate of VAT from 1 January 2018. It defines taxable supplies, registration thresholds, zero-rated and exempt categories, the reverse charge and record-keeping duties. Its Executive Regulation and FTA guidance supply further detail. Confirm the current VAT rules and any amendments with the Federal Tax Authority.
• Federal Tax Authority, The FTA is the UAE government body responsible for administering and collecting federal taxes, including VAT, Excise Tax and Corporate Tax. It handles registration, returns, refunds, audits and penalties, and publishes guidance through its portal. For any tax obligation in the UAE, confirm the current rules and procedures directly with the FTA.
• Federal Tax Authority (FTA), The UAE government body responsible for administering, collecting and enforcing federal taxes, including VAT, Excise Tax and Corporate Tax. It issues guidance, runs the EmaraTax portal, processes registrations and refunds, conducts tax audits and imposes penalties. Most UAE tax obligations are filed with the FTA. Confirm current rules and procedures with the FTA.
• Finance Lease, A finance lease transfers substantially all the risks and rewards of ownership of an asset to the lessee. For lessors under IFRS 16, it is recognised as a receivable rather than the underlying asset. The classification reflects substance over form, treating the arrangement economically like a financed purchase even when legal title is retained.
• Financial Year (Corporate Tax), The accounting year a business uses to prepare its financial statements, which normally also serves as its tax period for UAE Corporate Tax. It is commonly twelve months, such as the Gregorian calendar year, unless the business adopts a different year-end. The financial year sets the timeline for registration deadlines, filing and payment. Confirm your financial year for Corporate Tax with the FTA.
• First-In, First-Out (FIFO), First-in, first-out is an inventory cost formula that assumes the earliest items purchased are the first sold, so ending inventory reflects the most recent costs. Permitted under IAS 2, FIFO tends to value closing stock near current prices, and during inflation it usually reports higher profit than the weighted average method.
• First-In, First-Out (FIFO), An inventory costing method that assumes the earliest goods purchased are the first sold, so closing stock is valued at the most recent purchase prices. Permitted under IAS 2, FIFO tends to reflect current replacement costs in the balance sheet and, in times of rising prices, reports a lower cost of sales than weighted average.
• Five-Step Revenue Model, The five-step model under IFRS 15 is: identify the contract, identify the performance obligations, determine the transaction price, allocate that price to the obligations, and recognise revenue as each obligation is satisfied. This structured approach drives consistent revenue recognition across different contracts, industries and reporting entities.
• Fixed Asset Register, A detailed record of a business's property, plant and equipment, listing each asset with its cost, acquisition date, location, useful life, depreciation and carrying amount. It supports accurate depreciation, helps safeguard assets against loss, and provides evidence for audit and reconciliation to the general ledger.
• Flexi-Desk, A flexible, shared workspace package offered mainly by UAE free zones that gives a company a registered business address and limited desk access without a dedicated private office. It is a cost-effective option for small or startup businesses and may support a set number of visas. Visa allocations and terms differ by free zone, so confirm the package details with the relevant authority.
• Forecasting, The practice of estimating a business's future financial performance, such as revenue, costs and cash flow, based on historical data, current trends and assumptions. Unlike a fixed budget, forecasts are usually updated regularly as conditions change, helping management anticipate problems and make timely decisions.
• Foreign Permanent Establishment, A fixed place of business or dependent agent through which a UAE resident carries on business in another country. UAE Corporate Tax lets a resident elect to exempt the income and losses of a qualifying foreign permanent establishment, avoiding double taxation, instead of claiming a foreign tax credit. Confirm the election and conditions with the Federal Tax Authority.
• Foreign Tax Credit, A credit under UAE Corporate Tax that lets a taxable person reduce its UAE tax by tax already paid abroad on the same income, helping to avoid double taxation. The credit is generally limited to the UAE Corporate Tax otherwise due on that foreign income, and any excess is normally not refunded or carried forward. Confirm the conditions and limits with the FTA.
• Foreign Tax Credit (Corporate Tax), Relief under UAE Corporate Tax that allows tax paid in another country on income also taxable in the UAE to be credited against the UAE tax on that income, reducing double taxation. The credit is generally limited to the amount of UAE Corporate Tax that would be due on the same income, and unused credit is usually not refundable. Confirm how to claim the credit with the FTA.
• Forensic Audit, A specialised investigation of financial records to detect, examine and document fraud, misappropriation or other irregularities, often with findings suitable for use in legal or regulatory proceedings. It goes deeper than a standard audit, tracing transactions and gathering evidence to a standard that can support a dispute, claim or disciplinary action.
• Free Cash Flow, The cash a business generates from operations after deducting the capital expenditure needed to maintain or grow its asset base. It represents cash available to repay debt, pay dividends or reinvest, and is widely used to assess financial health and the quality of reported earnings beyond accounting profit.
• Free Zone, A designated economic area in the UAE offering incentives such as 100% foreign ownership, simplified setup and customs benefits. There are many free zones, each with its own authority and activities. A qualifying free zone person may access a 0% corporate tax rate on qualifying income. Confirm specific rules with the relevant zone and the FTA.
• Free Zone Authority, The body that establishes, licenses and regulates businesses within a specific UAE free zone, issuing trade licences, leasing premises and often acting as a one-stop shop for company setup and visas. Each free zone has its own authority, rules and permitted activities, and free zone treatment under tax law has conditions. Confirm setup, licensing and compliance requirements with the relevant free zone authority.
• Free Zone Company (FZCO), A limited liability entity in a UAE free zone owned by two or more shareholders, which can be individuals or corporate bodies. It provides liability limited to its share capital and the standard free zone advantages within the zone. The key distinction from an FZE is that an FZCO has multiple shareholders. Confirm the minimum shareholders, capital and ownership rules with the relevant free zone authority.
• Free Zone Customs Procedures, Customs processes that apply to goods entering, stored in, or leaving a UAE free zone. Goods imported into a designated free zone can generally be held without immediate customs duty, with duty becoming due if they enter the mainland. Movements need customs declarations and documents, and inspections may apply. Exact steps depend on the free zone and the relevant customs authority.
• Free Zone Establishment (FZE), A limited liability entity in a UAE free zone owned by a single shareholder, which may be an individual or a corporate body. It offers liability limited to its capital and the usual free zone benefits, such as full foreign ownership within the zone. The main difference from an FZCO is the number of shareholders. Confirm capital and ownership rules with the relevant free zone authority.
• Free Zone Person (Corporate Tax), A juridical person incorporated or registered in a UAE free zone that is within the scope of Corporate Tax. A free zone person is taxed under the standard rules unless it meets all conditions to be a Qualifying Free Zone Person, in which case qualifying income can be taxed at 0%. Being in a free zone does not by itself grant the 0% rate. Confirm your status with the FTA.
• Freelance Permit, A UAE permit that lets an individual work independently under their own name in a defined activity, such as media, technology, education or consulting, without setting up a full company. It is offered by several free zones and authorities, often with the option of a residence visa. Confirm eligible activities and visa options with the relevant authority.
• Functional Currency, Functional currency is the currency of the primary economic environment in which an entity operates, determined under IAS 21 by factors such as the currency that mainly influences sales prices and costs. It is the currency in which an entity measures its transactions, and it may differ from the currency used to present the financial statements.
• GAAP, Generally Accepted Accounting Principles, the body of accounting standards, conventions and rules used to prepare financial statements in a given country. The term most often refers to US GAAP, which differs in some areas from IFRS. Consistent application of a recognised GAAP framework makes financial statements comparable and reliable for users.
• GDRFA, The General Directorate of Residency and Foreigners Affairs, the emirate-level immigration authority responsible for entry permits, residence visas and related services, most prominently in Dubai. It works alongside the federal immigration system and issues approvals for sponsorship and residency. Roles can differ between emirates, so confirm the relevant process with the relevant authority.
• Gearing Ratio, A measure of how much a company relies on borrowed funds compared with shareholders' equity, commonly calculated as debt divided by equity. High gearing means greater reliance on debt, which can amplify returns but also increases financial risk and interest commitments. Lenders and investors use it to assess financial stability.
• General Assembly, The meeting of a UAE company's shareholders where key decisions are taken, such as approving financial statements, appointing auditors and directors, distributing profits and changing the memorandum of association. Company law sets notice, quorum and voting rules, and certain decisions require a higher majority. Minutes record the resolutions passed at the meeting.
• General Interest Deduction Limitation, A UAE Corporate Tax rule capping how much net interest expense a business can deduct in a tax period, broadly at the greater of 30% of tax-adjusted EBITDA or a de minimis amount of AED 12 million. Disallowed interest can usually be carried forward, and some exclusions apply. Confirm the current cap, safe harbour and exceptions with the FTA.
• General Ledger, The central accounting record that holds every account a business uses, summarising all transactions posted from journals into assets, liabilities, equity, income and expenses. It is the single source from which the trial balance and financial statements are produced. A well-kept general ledger is essential for accurate reporting, tax filing and a smooth audit.
• goAML Portal, The reporting platform operated by the UAE Financial Intelligence Unit on which in-scope businesses must register and file reports, including Suspicious Transaction Reports and Suspicious Activity Reports. Registration on goAML is a core AML obligation for financial institutions and many DNFBPs, and failing to register or report can attract penalties. Confirm current requirements with the regulator.
• goAML Registration, Enrolment on the goAML platform operated by the UAE Financial Intelligence Unit, used by reporting entities to submit suspicious activity and transaction reports. Designated non-financial businesses and professions, such as accountants, dealers in precious metals and real estate brokers, are generally required to register. Scope and obligations vary by sector, so confirm whether your business must register and report.
• Going Concern, The assumption that a business will continue operating for the foreseeable future and is not about to be liquidated or cease trading. Financial statements are normally prepared on this basis. Auditors assess whether material uncertainties exist over a company's ability to continue, and significant doubt must be disclosed and may affect the audit opinion.
• Golden Visa, A long-term UAE residence visa, typically granted for five or ten years and renewable, given to qualifying investors, entrepreneurs, highly skilled professionals, scientists, outstanding students and other eligible categories. It allows holders to live, work and study in the UAE with greater stability than standard visas. Confirm the current categories and criteria with the relevant authority.
• Golden Visa Categories, The eligibility groups for the UAE's long-term renewable residence permit, which include investors, entrepreneurs, highly skilled professionals, outstanding students, researchers and specialised talent in fields such as science, medicine and culture. Each category has its own qualifying conditions set by the authorities. Thresholds and criteria change over time, so confirm the current categories and requirements with the relevant authority.
• Goodwill, An intangible asset recognised in a business combination equal to the excess of the price paid over the fair value of the identifiable net assets acquired. It reflects future economic benefits such as reputation and customer relationships. Under IFRS it is not amortised but is tested for impairment at least annually.
• Goodwill Impairment, Goodwill arising in a business combination is not amortised but tested for impairment at least annually under IAS 36, by allocating it to the cash-generating units expected to benefit. If a unit's recoverable amount is below its carrying amount, the loss reduces goodwill first and cannot be reversed in later periods.
• Government Controlled Entity, An entity wholly owned and controlled by a UAE federal or local government that is specified in a Cabinet decision. Such entities are generally exempt from UAE Corporate Tax on their mandated activities, but income from any business activity carried on under a licence outside that mandate can be taxable. Confirm the scope of exemption and any taxable activities with the Federal Tax Authority.
• Gratuity Calculation, The method for working out an employee's end-of-service benefit in the UAE, generally based on length of continuous service and the last basic salary. The labour law sets the formula and any deductions or caps that apply. Because rules and any new savings-scheme alternatives can change, calculate carefully and confirm the current entitlement with the relevant authority.
• Green Visa, A UAE residence visa designed to give skilled employees, freelancers and certain self-employed people residency that is not tied to a single employer-sponsor, offering more flexibility and the ability to sponsor family members. Eligibility is generally linked to qualifications, income or skill level. The conditions can change, so confirm the current requirements with the relevant authority.
• Green Visa (UAE), A UAE residence option that lets skilled workers, freelancers and self-employed people sponsor themselves without being tied to a single employer. It typically offers a multi-year term and the ability to sponsor family members, subject to income, qualification or activity conditions. It complements the Golden Visa for shorter horizons. Confirm the current eligibility and validity with the relevant authority.
• Gross Margin, A profitability measure showing gross profit, revenue less cost of sales, as a percentage of revenue. It indicates how much of each unit of sales is left to cover operating expenses after direct costs. A higher gross margin signals stronger pricing power or production efficiency relative to the cost of goods sold.
• Halal Certification, Certification confirming that products, most often food, cosmetics and related items, comply with Islamic requirements and the UAE's halal standards. It is issued by accredited bodies recognised under the national halal scheme and can be required for import or sale of certain goods. The certificate supports market access in the UAE and other Muslim-majority markets. Requirements vary by product.
• Historical Cost, A measurement basis under which assets and liabilities are recorded at the actual amount paid or received when the transaction occurred, rather than at current market value. It is objective and verifiable, and remains common for many items, though some assets are later carried at fair value or net realisable value.
• Holding Company, A company whose main purpose is to own shares or assets in other companies rather than to trade itself. It can centralise ownership, manage risk and simplify group structuring. In the UAE it may benefit from participation exemption rules on qualifying shareholdings under Corporate Tax. Confirm the conditions for any exemption with the FTA.
• Holding Company (UAE), A UAE company set up mainly to own shares or assets in other companies rather than to trade directly. It can hold subsidiaries, real estate, intellectual property and investments, helping to group ownership and manage risk. Holding structures are available on the mainland and in free zones, with differing rules. Confirm permitted activities and any restrictions with the relevant authority.
• HS Code, A Harmonised System code, an internationally standardised number used to classify traded goods for customs, applied in the UAE to determine duties, restrictions and documentation for each product. Correct classification affects the customs duty payable and clearance. Because duty treatment depends on the precise code, verify the right classification with the relevant customs authority.
• IAS 1 Presentation of Financial Statements, IAS 1 sets out the overall framework for presenting general purpose financial statements, including the required statements, going concern and accrual assumptions, consistency, materiality and the structure of the statement of financial position and profit or loss. It underpins fair presentation and comparability across reporting periods and entities.
• IAS 10 Events After the Reporting Period, IAS 10 distinguishes adjusting events, which provide evidence of conditions existing at the reporting date and require the figures to be updated, from non-adjusting events, which arise afterwards and are only disclosed. It also addresses when dividends and going concern issues affect the financial statements prepared after period end.
• IAS 12 Income Taxes, IAS 12 prescribes the accounting for current and deferred income tax. Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities and their tax bases, using enacted or substantively enacted rates. With UAE Corporate Tax now in force, IAS 12 is increasingly relevant for in-scope entities; confirm specifics with the FTA.
• IAS 16 Property, Plant and Equipment, IAS 16 governs recognition and measurement of tangible long-term assets. Items are initially recorded at cost, then carried under the cost model or revaluation model, with depreciation allocated systematically over their useful lives. The standard also covers component accounting, subsequent expenditure, residual values and derecognition on disposal.
• IAS 19 Employee Benefits, IAS 19 sets out accounting for employee benefits, including short-term benefits, post-employment plans, other long-term benefits and termination benefits. It distinguishes defined contribution from defined benefit plans and requires actuarial measurement of obligations. In the UAE this commonly applies to end-of-service gratuity accruals for staff.
• IAS 2 Inventories, IAS 2 governs how inventories are measured and reported, requiring them to be carried at the lower of cost and net realisable value. Cost includes purchase, conversion and other costs of bringing items to their present location and condition. Permitted cost formulas are FIFO and weighted average; LIFO is prohibited under IFRS.
• IAS 21 Effects of Changes in Foreign Exchange Rates, IAS 21 explains how to account for foreign currency transactions and translate the results of foreign operations. Each entity determines its functional currency, then translates monetary items at closing rates with exchange differences recognised in profit or loss, while translation of a foreign operation into the presentation currency goes through other comprehensive income.
• IAS 23 Borrowing Costs, IAS 23 requires borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset to be capitalised as part of that asset's cost. A qualifying asset is one that necessarily takes a substantial period to get ready for use or sale. All other borrowing costs are expensed in the period incurred.
• IAS 24 Related Party Disclosures, IAS 24 requires disclosure of relationships, transactions and outstanding balances with related parties, such as parents, subsidiaries, key management and entities under common control. The aim is transparency over arrangements that may not be at arm's length, helping users understand how related party dealings could affect financial position and results.
• IAS 36 Impairment of Assets, IAS 36 ensures assets are not carried above their recoverable amount, defined as the higher of fair value less costs of disposal and value in use. Entities test for impairment when indicators exist, and annually for goodwill and certain intangibles. Any excess of carrying amount over recoverable amount is recognised as an impairment loss.
• IAS 37 Provisions, Contingent Liabilities and Assets, IAS 37 governs when a provision should be recognised: when there is a present obligation from a past event, an outflow of resources is probable, and the amount can be reliably estimated. Contingent liabilities and contingent assets are generally disclosed rather than recognised, reflecting prudence and avoiding overstatement of profit.
• IAS 38 Intangible Assets, IAS 38 sets criteria for recognising intangible assets such as licences, software and development costs, requiring identifiability, control and probable future economic benefits. Internally generated goodwill and most research costs cannot be capitalised. Recognised intangibles are amortised over their useful lives or, if indefinite, tested for impairment.
• IAS 7 Statement of Cash Flows, IAS 7 requires entities to present a statement of cash flows classifying movements into operating, investing and financing activities. Operating cash flows may use the direct or indirect method. The standard helps users assess liquidity, solvency and the quality of reported earnings by showing how cash is generated and used during the period.
• IAS 8 Accounting Policies, Changes and Errors, IAS 8 explains how to select and apply accounting policies and how to account for changes in policies, changes in accounting estimates and corrections of prior period errors. Policy changes and error corrections are generally applied retrospectively, while estimate revisions are recognised prospectively, supporting consistent and reliable financial reporting.
• IBAN, The International Bank Account Number, a standardised account identifier used by UAE banks to route domestic and international transfers accurately. A UAE IBAN begins with the country code AE followed by a fixed set of digits identifying the bank and account. It is required for salary payments and most transfers. Confirm your exact IBAN with the relevant bank.
• IBAN (UAE), The International Bank Account Number used to identify a specific bank account for transfers in and out of the UAE. A UAE IBAN starts with the country code AE followed by check digits and the account information, and it is required for salary payments, supplier transfers and most electronic transactions. It must be quoted accurately to avoid delays. Confirm your exact IBAN with your bank.
• ICA Smart Services, The online platform of the UAE Federal Authority for Identity, Citizenship, Customs and Port Security, used to apply for and manage entry permits, residence visas, Emirates ID and status changes across the emirates. It is widely used outside Dubai and increasingly nationwide. Procedures can change, so confirm the current services and steps with the relevant authority.
• IFRS, International Financial Reporting Standards, a global set of accounting rules issued by the IASB that govern how transactions and events are recognised, measured and disclosed in financial statements. They are widely used in the UAE and are generally the basis for preparing accounts under UAE Corporate Tax. A separate IFRS for SMEs framework exists for smaller entities.
• IFRS 10 Consolidated Financial Statements, IFRS 10 establishes the principles for preparing consolidated financial statements when one entity controls others. Control exists when an investor has power over the investee, exposure to variable returns, and the ability to use its power to affect those returns. The standard provides a single control model applied across all investees.
• IFRS 13 Fair Value Measurement, IFRS 13 defines fair value as the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. It sets out a single measurement framework and a three-level hierarchy ranking inputs from quoted market prices to unobservable data, and requires related disclosures.
• IFRS 15 Performance Obligation, Under IFRS 15, a performance obligation is a promise in a contract to transfer a distinct good or service to a customer. Revenue is recognised as each obligation is satisfied, either over time or at a point in time. Identifying the separate obligations within a contract is the second step of the standard's five-step revenue model.
• IFRS 15 Revenue from Contracts with Customers, IFRS 15 provides a single, principles-based model for recognising revenue from customer contracts using a five-step approach. Revenue is recognised when control of goods or services transfers to the customer, at an amount reflecting the consideration expected. It replaced earlier revenue standards and improves comparability across industries.
• IFRS 16 Leases, IFRS 16 requires lessees to recognise most leases on the balance sheet as a right-of-use asset and a corresponding lease liability, removing the old operating versus finance lease split for lessees. This brings previously off-balance-sheet commitments into the financial statements, affecting gearing, EBITDA and key performance ratios.
• IFRS 16 Lessee Accounting, IFRS 16 requires most lessees to recognise a right-of-use asset and a corresponding lease liability for nearly all leases, removing the old operating versus finance lease split for lessees. The asset is depreciated and the liability unwinds with interest, replacing a single rental expense with depreciation and finance costs in profit or loss.
• IFRS 9 Financial Instruments, IFRS 9 governs the classification, measurement and impairment of financial instruments and hedge accounting. Financial assets are classified based on the business model and cash flow characteristics, measured at amortised cost or fair value. It introduces a forward-looking expected credit loss model for impairment, replacing the older incurred loss approach.
• IFRS 9 Hedge Accounting, IFRS 9 hedge accounting lets an entity match the timing of gains and losses on a hedging instrument with the hedged item, reducing profit or loss volatility. It covers fair value, cash flow and net investment hedges, and requires a documented economic relationship and an effectiveness assessment for the designation to qualify.
• IFRS for SMEs, A simplified version of International Financial Reporting Standards designed for small and medium-sized entities that do not have public accountability. It reduces disclosure and some measurement complexity compared with full IFRS, making reporting more proportionate for smaller businesses. Many UAE SMEs use it; confirm the appropriate framework with your accountant and auditor.
• Immigration Establishment Card, A registration issued by the UAE immigration authority that allows a company to act as a sponsor and apply for residence and work visas for its staff and their dependants. It is a prerequisite for processing employee visas and must be kept valid. Issuing bodies differ between mainland and free zones, so confirm the application and renewal steps with the relevant authority.
• Impairment, A reduction in an asset's carrying amount when it exceeds the amount recoverable through use or sale. Under IAS 36 an entity assesses indicators, compares carrying value to the recoverable amount, and recognises any shortfall as an impairment loss in profit or loss, protecting the balance sheet from overstating asset values.
• Impairment Indicator, An impairment indicator is an internal or external sign that an asset may be carried above its recoverable amount, such as a market decline, obsolescence, physical damage or rising interest rates. Under IAS 36, the presence of any indicator triggers a formal impairment test comparing carrying amount with recoverable amount.
• Import Code, A unique customs client identifier issued to a registered UAE business that allows it to clear imported and exported goods through customs. Often called the customs code, it is tied to the trade licence and must be kept valid for shipments to be processed. It is issued by the relevant emirate's customs authority, so confirm the application and renewal with the relevant authority.
• Import Permit, An approval required before bringing certain goods into the UAE, in addition to a standard customs declaration. Permits are typically needed for regulated categories such as foodstuffs, medicines, chemicals, telecom equipment and some animals or plants, and are issued by the competent authority for that product. The permit must usually be in place before the goods arrive at the port.
• Income Statement, Also called the profit and loss account, this statement reports a business's revenue, costs and expenses over a period and shows the resulting profit or loss. It reveals how the company performed and is a key input for tax, including UAE Corporate Tax, which is generally based on accounting profit. It pairs with the balance sheet and cash flow statement.
• Industrial Licence, A UAE licence required for businesses engaged in manufacturing, industrial production or processing of raw materials into finished or semi-finished goods. It usually involves additional approvals relating to premises, the environment and the Ministry of Industry and Advanced Technology. A physical warehouse or factory is typically needed. Confirm the requirements with the relevant authority.
• Inherent Risk, The susceptibility of an account balance, transaction class or disclosure to material misstatement before considering any related internal controls. It is higher for complex estimates, judgemental areas or items prone to fraud. Together with control risk it forms the risk of material misstatement that auditors assess.
• Initial Approval, A preliminary no-objection from the UAE licensing authority confirming it has no objection to the proposed business activity and ownership before the full licence is issued. It lets applicants proceed with later steps such as leasing premises and obtaining external approvals, but does not by itself permit trading. Confirm its validity period and conditions with the relevant authority.
• Initial Approval (UAE), A preliminary consent from the UAE licensing authority confirming it has no objection to a proposed business activity and structure, allowing the applicant to proceed with the next setup steps. It does not by itself permit trading and is typically valid for a limited period. Some activities still need external approvals afterwards. Confirm the validity and conditions with the relevant authority.
• Input Method (Revenue), An input method measures progress toward completing a performance obligation by reference to the resources consumed, such as costs incurred, labour hours or materials used relative to total expected inputs. IFRS 15 allows it for over-time revenue recognition where inputs reasonably reflect the transfer of control to the customer.
• Input VAT, The 5% VAT a business pays to its suppliers on goods and services it buys for its taxable activities. A VAT-registered business can usually recover input VAT by offsetting it against the output VAT it owes, provided it holds valid tax invoices and the expense is not blocked. Confirm recovery conditions with the UAE Federal Tax Authority (FTA).
• Instant Licence, A fast-track trade licence offered by some UAE authorities and free zones that can be issued quickly, sometimes within a day, often without an immediate office lease for the first period. It suits entrepreneurs who want to start trading rapidly and arrange premises later. Eligible activities, validity and renewal conditions vary, so confirm the specifics with the relevant authority.
• Instant Licence, A fast-track UAE business licence, offered by some economic departments such as Dubai's, that can be issued quickly in a single step for eligible activities, often without an immediate tenancy contract for the first year. It is designed to speed up start-up. Eligible activities, conditions and renewal requirements are set by the issuing department.
• Intangible Asset, An identifiable non-monetary asset without physical substance, such as software, patents, licences or trademarks, controlled by the entity and expected to generate future economic benefits. Under IAS 38 it is recognised when criteria are met, then carried at cost less amortisation and any impairment, or occasionally at a revalued amount.
• Intelaq Licence, A home-based business licence offered to UAE nationals, historically through Dubai's economic department, to support Emirati entrepreneurs running small or micro businesses from home. It allows a defined range of activities without requiring separate commercial premises. Eligibility, permitted activities and any visa implications are determined by the issuing authority.
• Interest Coverage Ratio, A solvency measure dividing earnings before interest and tax by interest expense to show how many times a company's operating profit covers its interest costs. A higher ratio suggests a comfortable ability to service debt, while a figure near one signals that profits barely cover finance costs and that the business is vulnerable to earnings shocks.
• Interest Deduction Capping (Corporate Tax), A rule under UAE Corporate Tax that limits how much net interest expense a business can deduct in a tax period, designed to discourage excessive debt financing. The general limitation restricts the deduction by reference to a measure of earnings, with amounts above the cap potentially carried forward. A safe harbour may apply to smaller amounts. Confirm the limitation rules with the FTA.
• Internal Audit, A review function inside an organisation that independently assesses risk management, internal controls and governance to help management improve operations. Unlike an external audit, it does not produce a public opinion on the financial statements. Internal audit can run in-house or be outsourced, and its findings support stronger controls and a smoother external audit.
• Internal Control Framework, An internal control framework is the structured system of policies and procedures designed to give reasonable assurance over reliable reporting, effective operations and compliance. Widely referenced models such as COSO cover the control environment, risk assessment, control activities, information and communication, and monitoring activities.
• Internal Rate of Return, IRR is the discount rate at which a project's net present value equals zero, expressed as an annual percentage. It represents the effective return a project is expected to generate. A project is generally attractive when its IRR exceeds the required rate of return or cost of capital. IRR is usually reviewed together with NPV.
• International Standards on Auditing, ISAs are the globally recognised standards, issued by the IAASB, that set out how external audits should be planned, performed and reported. They cover evidence, risk assessment, materiality and the form of the audit report. Audits in the UAE are commonly conducted in accordance with ISAs; confirm the applicable standards with your auditor and authority.
• Inventory Turnover Ratio, An efficiency measure calculated as cost of sales divided by average inventory, showing how many times stock is sold and replaced over a period. A higher turnover generally indicates strong sales or lean inventory management, while a low figure may point to overstocking, obsolescence or weak demand. It is often expressed in days held.
• Inventory Valuation, The process of assigning a monetary value to stock held at the reporting date. Under IAS 2 inventory is measured at the lower of cost and net realisable value, with cost determined using a method such as first-in-first-out or weighted average. The chosen basis directly affects cost of sales and reported profit.
• Investment Manager Exemption, A UAE Corporate Tax provision under which a UAE-based investment manager acting for a non-resident is not treated as creating a taxable presence for that non-resident, provided independence, regulation and arm's-length conditions are met. It helps the UAE function as a fund-management hub without triggering tax for offshore clients. Confirm the conditions with the Federal Tax Authority.
• Investor Visa, A UAE residence visa granted to a person who invests in or owns a share of a business or qualifying assets in the country, allowing them to live in the UAE on the basis of that investment. Depending on the level and type of investment it may be short or long term, including a route to the Golden Visa. Confirm the qualifying thresholds and documents with the relevant authority.
• ISA 200 Overall Objectives of the Auditor, The framework standard that sets the auditor's overall objectives: to obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether caused by fraud or error, and to report on them. It establishes the concepts of professional judgement, professional scepticism and the inherent limitations of an audit.
• ISA 240 The Auditor's Responsibilities Relating to Fraud, The standard governing how auditors address the risk that financial statements are materially misstated due to fraud. It requires maintaining professional scepticism, treating revenue recognition as a presumed fraud risk, evaluating management override of controls, and performing procedures responsive to fraud risks identified during planning and the audit.
• ISA 315 Identifying and Assessing Risks of Material Misstatement, The standard requiring the auditor to identify and assess risks of material misstatement at the financial statement and assertion levels by understanding the entity, its environment, the applicable reporting framework and its system of internal control. This risk assessment forms the basis for designing and performing further audit procedures.
• ISA 330 The Auditor's Responses to Assessed Risks, The standard that directs how auditors design and perform procedures responsive to the risks assessed under ISA 315. Responses include tests of controls where the auditor intends to rely on them and substantive procedures such as tests of details and analytical procedures, with the nature, timing and extent of work matched to the assessed risk.
• ISA 500 Audit Evidence, The standard setting out what constitutes sufficient appropriate audit evidence, where sufficiency concerns quantity and appropriateness concerns relevance and reliability. It explains that evidence from independent external sources is generally more reliable, and describes procedures such as inspection, observation, confirmation, recalculation, reperformance and inquiry.
• ISA 520 Analytical Procedures, The standard covering the use of analytical procedures, which evaluate financial information by studying plausible relationships among financial and non-financial data. They may be used as substantive procedures and are required near the end of the audit to form an overall conclusion on whether the financial statements are consistent with the auditor's understanding.
• ISA 530 Audit Sampling, The standard governing how auditors apply procedures to less than 100% of a population so that each item has a chance of selection and conclusions can be drawn about the whole. It addresses statistical and non-statistical methods, sample design, the treatment of misstatements found, and how to project errors and consider sampling risk.
• ISA 560 Subsequent Events, The standard addressing events occurring between the reporting date and the date the financial statements are issued. Auditors perform procedures to identify events requiring adjustment or disclosure, distinguishing those that provide evidence of conditions existing at the reporting date from those indicating conditions arising afterwards.
• ISA 570 Going Concern, The standard guiding the auditor's work on management's use of the going concern basis of accounting. The auditor evaluates whether a material uncertainty exists about the entity's ability to continue operating, considers the adequacy of disclosures, and determines the effect on the auditor's report, including any material uncertainty paragraph.
• ISA 700 Forming an Opinion and Reporting on Financial Statements, The standard that establishes how an auditor forms an opinion and structures the auditor's report. It requires concluding whether reasonable assurance has been obtained that the statements are free from material misstatement, and prescribes report content such as the basis for opinion, going concern and key audit matters where applicable.
• ISA 701 Communicating Key Audit Matters, The standard covering key audit matters, which are those matters that, in the auditor's professional judgement, were of most significance in auditing the financial statements. They are selected from matters communicated to those charged with governance and described in a dedicated section of the report, mainly for listed entities.
• ISA 705 Modifications to the Opinion, The standard explaining when and how an auditor modifies the opinion. A qualified opinion is given for material but not pervasive issues, an adverse opinion when misstatements are both material and pervasive, and a disclaimer when the auditor cannot obtain sufficient appropriate evidence and the possible effects could be material and pervasive.
• Joint Arrangement, A joint arrangement under IFRS 11 is one in which two or more parties share control through a contract requiring unanimous consent for key decisions. It is classified as a joint operation, where parties account for their own assets, liabilities and share of revenue, or a joint venture, accounted for using the equity method.
• Journal Entry, A record of a single financial transaction in the accounting system, showing the accounts debited and credited, the amounts, the date and a description. Journal entries follow double-entry rules so debits equal credits, and they feed into the general ledger. Adjusting entries at period end capture items such as accruals, prepayments and depreciation.
• Key Performance Indicator, A KPI is a measurable value that shows how effectively a business, team or individual is achieving a specific objective. Financial KPIs include gross margin, revenue growth and return on investment, while operational KPIs might track customer retention or delivery times. Well-chosen KPIs focus attention on the outcomes that matter most.
• Know Your Customer, KYC refers to the identification and verification steps a business takes to confirm a customer's identity before and during a business relationship, forming the front end of customer due diligence. It typically involves collecting identity documents, verifying details and screening against sanctions and watchlists. KYC is central to UAE AML compliance for financial institutions and DNFBPs.
• Labour Card, A document or record that confirms an employee is legally registered to work for a particular employer in the UAE, historically issued as a physical card and now often part of the electronic work permit record. It links the worker to the employer's labour file and contract. The exact format and name vary between authorities, so confirm the current requirement with the relevant authority.
• Labour Quota, The number of work permits a UAE employer is allowed to hold, set by the authorities based on factors such as the company's activity, premises size and category. The quota limits how many foreign employees a business can sponsor at one time and may need to be increased before new hires. Rules differ for mainland and free zones. Confirm the applicable quota with MOHRE or the relevant authority.
• Lease Accounting, Lease accounting covers how entities record rights and obligations arising from lease contracts. Under IFRS 16, lessees generally capitalise leases as a right-of-use asset and lease liability, while lessors classify leases as finance or operating. Correct treatment affects assets, liabilities, depreciation, interest expense and reported cash flows.
• Legal Translation (UAE), Translation of official documents into Arabic by a translator licensed by the UAE Ministry of Justice, required because Arabic is the official language of the courts and many government bodies. Contracts, powers of attorney, certificates and court papers often must be legally translated to be accepted. Only approved translators can stamp such documents. Confirm whether translation is needed with the relevant authority or adviser.
• Letter of Credit, A bank's written undertaking to pay a seller a stated amount once the agreed shipping and trade documents are presented, widely used in UAE import and export to reduce the risk between buyer and seller. It shifts payment assurance to the bank, subject to strict compliance with the terms. Charges and conditions vary, so confirm the arrangement with the relevant bank.
• Letter of Credit (Term), A bank undertaking, common in UAE trade, to pay a seller once the agreed shipping and compliance documents are presented, reducing risk for both parties in a transaction. The buyer's bank issues it and the seller's bank usually checks the documents. It is widely used in import and export deals. Terms, costs and document rules vary, so confirm the arrangement with your bank or trade finance adviser.
• Level 1, 2 and 3 Inputs, Under IFRS 13, Level 1 inputs are quoted prices in active markets for identical assets or liabilities, Level 2 are other observable inputs such as quoted prices for similar items, and Level 3 are unobservable inputs reflecting the entity's own assumptions. The level used determines the rigour of fair value disclosures.
• Limited Contract, A fixed-term UAE employment contract that runs for a defined period and can be renewed by agreement. Under current labour law most private-sector contracts are limited or fixed-term, with rules governing renewal, early termination and end-of-service pay. Terms and renewal practices can vary, so confirm the current contract requirements with the relevant authority.
• Limited Liability Company, A common UAE business structure in which owners' liability is limited to their capital contribution, protecting personal assets from company debts. An LLC can be established on the mainland or in many free zones, and recent reforms allow full foreign ownership for many activities. Setup, governance and ownership rules vary by jurisdiction; confirm current requirements with the relevant authority.
• Limited Liability Company (UAE), The most common UAE company form, where the liability of each owner is limited to their share of the capital. Under current rules most mainland commercial and industrial activities allow full foreign ownership, though some strategic activities still require an Emirati partner. An LLC is registered with the local economic department. Confirm ownership and capital rules with the relevant authority.
• Limited-Term Contract, A fixed-term employment contract that runs for a defined period and can be renewed by agreement. Under the UAE's current Labour Law all private sector contracts are fixed-term, replacing the older unlimited model. Ending the contract early can trigger compensation depending on who terminates and why. The end-of-service gratuity still applies on completion. Confirm the renewal and termination rules with MOHRE or a qualified adviser.
• Liquidity, A measure of how easily a business can meet its short-term obligations as they fall due, and how quickly assets can be converted into cash without significant loss of value. Strong liquidity means enough cash and near-cash resources to pay suppliers, staff and lenders on time. It is often assessed using ratios such as the current ratio.
• Local File, A transfer pricing document focused on a specific UAE entity's related-party transactions, setting out the dealings, the analysis and how pricing meets the arm's length principle. Under UAE Corporate Tax, businesses above set thresholds may need a local file together with a master file. Confirm the current thresholds and content requirements with the FTA.
• Local Service Agent, A UAE national or wholly UAE-owned company appointed by a foreign-owned professional or branch business on the mainland to handle government-related formalities. The agent does not own shares or share in profits and is usually paid an agreed annual fee. Their exact role depends on the licence and structure, so confirm the requirement with the relevant authority.
• Mainland Company, A business licensed by the relevant emirate's economic department (for example Dubai's DET) to trade directly across the UAE local market and internationally, without the geographic restrictions of a free zone. Recent reforms allow full foreign ownership for many activities. Confirm licensing and ownership rules with the relevant authority.
• Management Letter, A letter from the external auditor to management and those charged with governance that highlights weaknesses in internal controls, accounting processes or compliance noticed during the audit, along with recommendations. It is separate from the audit opinion and is intended to help the business improve. Acting on its points strengthens controls before the next audit.
• Management Override of Controls, Management override is the risk that those in charge bypass otherwise effective internal controls to manipulate records or misstate the financial statements. Because management is uniquely placed to do this, the ISAs treat it as a presumed fraud risk, prompting auditors to test journal entries, review estimates for bias and examine unusual transactions.
• Management Representation Letter, A written statement that management provides to the auditor, confirming its responsibilities and the completeness and accuracy of information given during the audit. It is a form of audit evidence that supports other procedures, though it does not replace them, and is normally signed near the date of the audit report.
• Mandatory Registration Threshold, The level of taxable supplies and imports above which a UAE business must register for VAT, currently AED 375,000 over the previous 12 months, or where it expects to exceed this in the next 30 days. Crossing it triggers a duty to register within the set deadline, with penalties for late registration. Confirm the current threshold with the FTA.
• Margin of Safety, The amount by which actual or budgeted sales exceed the break-even level, often expressed as a percentage of sales. It shows how far revenue can fall before a business starts making a loss. A larger margin of safety indicates lower risk, while a thin margin means even a small drop in sales could push the business into loss.
• Market Value (Corporate Tax), The price that would be agreed between independent, willing parties in an open-market transaction, used under UAE Corporate Tax to value certain dealings, particularly with related parties or connected persons. Where actual prices differ from market value, taxable income may be adjusted. It supports the arm's length principle and prevents tax being reduced artificially. Confirm market-value determinations with the FTA.
• Master File, A transfer pricing document giving a high-level overview of a multinational group's global business, including its structure, intangibles, financing and overall transfer pricing policies. Under UAE Corporate Tax, larger groups that meet set thresholds may have to prepare a master file alongside a local file. Confirm whether the thresholds apply to your group with the FTA.
• Matching Principle, The matching principle holds that expenses should be recognised in the same period as the revenues they help generate, so profit reflects the true cost of earning income. It supports the accruals basis and influences treatments such as depreciation, prepayments and accrued costs, preventing distorted period-by-period results.
• Materiality, The threshold above which a misstatement or omission could reasonably influence the decisions of users of the financial statements. Auditors set materiality to plan their work and judge whether errors matter, focusing effort on amounts and disclosures significant enough to affect the overall view. It involves both the size and the nature of an item.
• Materiality Threshold, Materiality is the level at which an omission or misstatement could influence the economic decisions of users of financial statements. It guides both preparers in deciding what to disclose and auditors in scoping their work and evaluating errors. Materiality depends on the size and nature of the item and the surrounding circumstances.
• Memorandum Amendment, A change to a UAE company's memorandum of association, the founding document that sets out ownership, capital, activities and management. Amendments are needed for events such as adding shareholders, transferring shares, changing capital or activities, and usually require a shareholder resolution, notarisation for mainland LLCs and updating the licence with the relevant authority.
• Memorandum of Association, A founding legal document of a UAE company that sets out key details such as its name, objectives, shareholders, share capital and how it is owned and managed. Together with any articles, it forms the company's constitution and is required to obtain a trade licence. Changes such as adding partners or amending activities usually require an updated, notarised version.
• Memorandum of Association (Term), A founding legal document that sets out the key details of a UAE company, including its name, objects, shareholders, share capital and how shares are divided. For many company types it must be notarised and forms part of the licensing file. Changes such as new partners or capital usually require an amended and re-notarised version. Confirm the required content and formalities with a notary or qualified adviser.
• Merchant Account, A type of bank account that lets a UAE business accept card and digital payments from customers, with funds settled into its main account after processing. It is usually arranged with a bank or acquirer and works alongside a payment gateway for online sales. Fees, settlement times and eligibility depend on the provider and the business's risk profile. Confirm the terms with your bank or payment provider.
• Minimum Share Capital (UAE), The amount of capital that owners commit to a UAE company, divided into shares and stated in its constitutional documents. Many mainland LLCs no longer have a fixed statutory minimum and set capital that is adequate for the activity, while some free zones and company forms specify minimum amounts. Requirements differ by structure, so confirm the applicable capital rules with the relevant authority.
• Ministerial Decision, A decision issued by a UAE minister, such as the Minister of Finance, to implement specific provisions of a federal law or Cabinet Decision. In tax, Ministerial Decisions clarify matters like small business relief, qualifying income or transfer pricing documentation thresholds. They are technical and change over time, so confirm the current decision and its scope before relying on it.
• Ministry of Economy (UAE), The UAE federal ministry overseeing economic policy, commercial regulation, intellectual property and anti-money-laundering supervision for many non-financial businesses. It administers areas such as Ultimate Beneficial Owner rules and the goAML platform for designated sectors. Its remit is broad and sector-specific, so confirm which obligations apply to your business with the Ministry of Economy.
• Ministry of Finance (UAE), The UAE federal ministry that sets national fiscal policy, drafts tax legislation and represents the country on international tax matters such as double taxation agreements and OECD frameworks. While the Ministry shapes tax law, day-to-day administration of VAT and Corporate Tax sits with the Federal Tax Authority. Confirm policy and treaty details with the Ministry of Finance.
• Ministry of Human Resources and Emiratisation (MOHRE), The UAE federal ministry that regulates private-sector labour relations, including work permits, employment contracts, the Wages Protection System and Emiratisation targets. It oversees employer obligations on pay, leave and end-of-service entitlements for many mainland employees, while free zones may have their own frameworks. Confirm which rules apply to your workforce and the current obligations with MOHRE.
• MOFA Attestation, Certification of a document by the UAE Ministry of Foreign Affairs, usually the final local step before a foreign or locally issued document is accepted for official use in the country. It typically follows attestation by the issuing country's authorities and the UAE embassy abroad. It is often needed for education, marriage and commercial documents. Confirm the current requirements with the ministry or a qualified adviser.
• MOHRE, The UAE Ministry of Human Resources and Emiratisation, the federal body that regulates private-sector employment on the mainland. It oversees work permits, employment contracts, the Wage Protection System, dispute resolution and Emiratisation targets. Free zones often have their own labour rules, so confirm which authority applies to your business with the relevant authority.
• Multi-Currency Account, A bank account that lets a UAE business hold and transact in several currencies, such as US dollars, euros and pounds, within one relationship. It can reduce conversion costs for companies that trade internationally and helps match receipts and payments in the same currency. Available currencies, fees and minimum balances differ by bank. Confirm the terms and supported currencies with your chosen bank.
• Multiple Supply, A transaction where two or more distinct goods or services are supplied together but each retains its own VAT treatment, rather than being combined into one. Each element is valued and taxed separately, so part of a bundle could be standard-rated while another part is zero-rated or exempt. Distinguishing this from a single composite supply is important. Confirm the analysis with the FTA.
• Mutual Agreement Procedure, A mechanism under a double taxation agreement that lets the competent authorities of two countries, including the UAE Ministry of Finance, resolve disputes such as double taxation or disagreements over treaty interpretation. Taxpayers can request a MAP where they consider that taxation is not in line with a treaty. Eligibility and deadlines apply, so confirm the process with the Ministry of Finance.
• Net Asset Value Per Share, A measure of the book value backing each share, calculated as total assets less total liabilities divided by the number of shares in issue. It represents the equity attributable to each share according to the balance sheet. Comparing it with the market price shows whether shares trade at a premium or discount to their net assets.
• Net Margin, A profitability ratio expressing net profit after all expenses, interest and tax as a percentage of revenue. It shows how much of each unit of sales the business ultimately keeps as profit and is a broad indicator of overall efficiency, capturing operating performance, financing costs and the tax burden together.
• Net Present Value, NPV is the value today of a project's expected future cash flows, less the initial investment, after discounting those cash flows at a chosen rate to reflect the time value of money. A positive NPV suggests a project should add value, while a negative NPV suggests it may destroy value. It is a core tool in investment appraisal.
• Net Realisable Value, Net realisable value, used in IAS 2, is the estimated selling price of inventory in the ordinary course of business less the estimated costs of completion and the costs necessary to make the sale. Inventory is carried at the lower of cost and net realisable value, so any expected loss is recognised promptly.
• Nexus (Corporate Tax), A connection that can bring a non-resident person within the scope of UAE Corporate Tax even without a permanent establishment, for example through income derived from immovable property in the UAE. Where a nexus exists, the non-resident may need to register and account for tax on the relevant income. The criteria are set out in Cabinet decisions. Confirm whether you have a nexus with the FTA.
• Nexus Rules, Rules that determine when a non-resident person has a sufficient connection to the UAE to be within the scope of Corporate Tax, for example through a permanent establishment, a UAE source of income or, for some non-residents, a nexus created by UAE immovable property. They decide who must register and what income is taxable. Confirm the current nexus tests with the Federal Tax Authority.
• Nominee Director Register, A register that UAE companies must keep under beneficial ownership rules, recording any nominee board members or managers who act on the instructions of another person. It supports transparency by revealing where directors are acting for someone else. The register is maintained alongside the partners and beneficial owner registers. Confirm the format, content and filing duties with your licensing authority.
• Nominee Shareholder, A person or entity that holds shares in a company on behalf of another party, the real or beneficial owner, rather than for their own benefit. Nominee arrangements must be transparent under UAE rules, and the underlying beneficial owner still has to be identified and disclosed for UBO purposes. Hidden nominee structures can raise anti-money-laundering and compliance concerns.
• Non-Controlling Interest, The portion of a subsidiary's equity and profit that is not owned by the parent company, shown separately within consolidated equity and profit or loss. It represents the stake held by other shareholders in a partly owned subsidiary and ensures group accounts reflect ownership that the parent does not control fully.
• Non-Controlling Interest Measurement, At acquisition under IFRS 3, an entity may measure non-controlling interest either at fair value, which also recognises goodwill attributable to it, or at the proportionate share of the acquiree's identifiable net assets. The choice affects reported goodwill and the carrying amount of the minority stake within consolidated equity.
• Non-Deductible Expenditure (Corporate Tax), Costs that UAE Corporate Tax law does not allow as a deduction when computing taxable income, so they are added back to profit. Examples include fines and penalties, certain donations, and a portion of specific costs such as entertainment. Some items are partly restricted rather than fully disallowed. These rules prevent reducing tax with non-qualifying costs. Confirm disallowed items with the FTA.
• Non-Executive Director, A member of a UAE company's board who is not involved in day-to-day management but contributes to oversight, strategy and governance. Non-executive directors are common in regulated entities and listed companies, where they may sit on audit and governance committees and provide independent challenge to management. Their duties and liabilities are set by company law and the firm's constitution.
• Non-Recoverable Input VAT, Input VAT that a business cannot reclaim because it does not relate to taxable supplies or falls within categories blocked by UAE VAT law, such as certain entertainment and some motor vehicle costs. Non-recoverable VAT becomes part of the cost of the expense. Apportionment may be needed where costs relate to both taxable and exempt activities. Confirm what is blocked with the FTA.
• Non-Resident Person (Corporate Tax), A person that is not a UAE resident for Corporate Tax but is still taxable because it has a permanent establishment in the UAE, derives state-sourced income, or has a nexus in the country. A non-resident is generally taxed only on income attributable to its UAE activities. Specific rules determine what falls within charge. Confirm your position as a non-resident with the FTA.
• Notarisation (UAE), The process of having a document officially certified by a UAE notary public to confirm signatures and give it legal effect. Common notarised documents include powers of attorney, memoranda of association and corporate resolutions. Notaries operate within the courts and through approved private offices in some emirates. Requirements and fees vary by emirate and document, so confirm the process with a notary or qualified adviser.
• Notice Period, The advance notice an employer or employee must give before ending a UAE employment contract, allowing time to hand over duties or find a replacement. The labour law sets a general range, commonly between thirty and ninety days, with the agreed period stated in the contract. Specific rules differ for probation and certain cases, so confirm them with the relevant authority.
• Offshore Company, A company registered in a UAE offshore jurisdiction, such as RAK ICC or JAFZA Offshore, used mainly for international business, holding assets or estate planning rather than trading inside the UAE market. It usually cannot obtain UAE residence visas or local premises. Confirm permitted activities and tax treatment with the relevant registrar and the FTA.
• Offshore Company (UAE), A non-resident UAE company used mainly to hold assets, own shares or carry on international business rather than to trade within the UAE market. Offshore vehicles, offered in jurisdictions such as RAK ICC and JAFZA Offshore, generally cannot obtain UAE residence visas or trade onshore. Permitted uses and banking access vary, so confirm the rules with the relevant offshore authority.
• Offshore Jurisdiction, In the UAE context, a regime that allows formation of an offshore company used mainly for holding assets, international trade or investment rather than onshore operations or local visas. Offshore companies differ from free zone and mainland entities in permitted activities and substance considerations. Tax and banking treatment can be sensitive, so confirm the rules and use cases with the relevant authority and your advisers.
• Onerous Contract, An onerous contract under IAS 37 is one in which the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received from it. The entity recognises the present obligation under the contract as a provision, measured at the lower of the cost to fulfil it and any penalty for exiting.
• Operating Expenditure, OpEx is the day-to-day running costs of a business, such as rent, salaries, utilities, marketing and supplies, consumed within the current period. Unlike capital expenditure, operating expenses are charged in full to the profit and loss account when incurred, directly reducing reported profit for that period.
• Operating Lease, An operating lease is a lease that does not transfer substantially all the risks and rewards of ownership. Under IFRS 16, lessors continue to classify leases as operating or finance, keeping the asset on their books and recognising lease income over the term, while lessees now generally capitalise most leases regardless of this label.
• Operating Leverage, A measure of how sensitive a company's operating profit is to changes in sales, driven by the mix of fixed and variable costs. A business with high fixed costs has high operating leverage, so profits rise sharply as sales grow but fall steeply when sales decline. It captures the risk and reward in a firm's cost structure.
• Operating Margin, A ratio showing operating profit as a percentage of revenue, measuring profitability from core business activities before interest and tax. It isolates how well a company controls operating costs relative to sales and is closely related to earnings before interest and tax, excluding financing and one-off items.
• Other Comprehensive Income, Other comprehensive income comprises items of income and expense that IFRS requires or permits to be recognised outside profit or loss, such as revaluation surpluses, certain remeasurements of defined benefit plans and some foreign currency and hedging gains. Some items are later reclassified to profit or loss, while others are not.
• Out-of-Scope Supply, A transaction that falls outside the scope of UAE VAT entirely, so no VAT is charged and it is generally not reported as a taxable supply. This typically covers sales made wholly outside the UAE or activities that do not meet the definition of a supply for consideration. Treatment differs from zero-rated supplies, which are taxable at 0%. Confirm classification with the FTA.
• Output Method (Revenue), An output method measures progress by reference to results delivered to the customer, such as units produced, milestones reached or surveys of work performed, relative to the total expected. IFRS 15 permits it for over-time recognition when the chosen output faithfully depicts the value transferred to the customer to date.
• Output VAT, The VAT a registered business charges its customers on taxable supplies of goods and services, generally at the UAE standard rate of 5%. Output VAT is collected on behalf of the Federal Tax Authority (FTA) and reported in the VAT return, where it is set against recoverable input VAT to determine the net amount due. Confirm current rules with the FTA.
• Overtime (UAE), Extra pay or compensation for work beyond normal hours under the UAE Labour Law. Standard overtime is generally paid at the basic wage plus 25 percent, rising to 50 percent for work performed at night within defined hours, with separate rules for rest days. Some senior roles may be excluded. Calculations depend on the contract and hours, so confirm the position with MOHRE or a qualified adviser.
• Participation Exemption, A UAE Corporate Tax relief that can exempt dividends and capital gains from a qualifying shareholding, known as a participation, in another company. Conditions typically include a minimum ownership level, a minimum holding period and a subject-to-tax or similar test. It helps avoid double taxation within groups. Confirm the detailed conditions with the FTA.
• Partner Visa, A UAE residence visa issued to a shareholder or partner in a company based on their ownership stake, rather than as an employee. It lets owners reside in the UAE and is often linked to the value of their share in the licence. Minimum share values and conditions vary by emirate and authority, so confirm the current eligibility rules with the relevant authority.
• Partner Visa (UAE), A UAE residence visa granted to an owner or partner of a licensed company based on their shareholding rather than an employment contract. It allows the investor to live in the country and is usually tied to the validity of the trade licence and the company's good standing. Eligibility can depend on capital and activity. Confirm the current requirements with the relevant authority.
• Partners or Shareholders Register, A register that UAE companies must maintain listing their partners or shareholders, the number and class of shares or interests held and related details, as required under beneficial ownership rules. It complements the beneficial owner and nominee director registers and supports corporate transparency. Content and updating obligations apply, so confirm the current requirements with your licensing authority.
• Payables Turnover, An efficiency measure calculated as credit purchases divided by average trade payables, showing how quickly a business pays its suppliers. A higher turnover means faster payment, while a lower figure indicates the company takes longer to settle, which can preserve cash but may strain supplier relationships. It underpins the days payable outstanding figure.
• Payment Gateway (UAE), A service that securely processes online and card payments between a UAE business's website or app and the banking system, passing transaction data for authorisation. It links to a merchant account so e-commerce sales can be collected. Providers must meet card security standards, and pricing and integration differ. Confirm the fees, supported methods and requirements with the gateway provider or your bank.
• PEP Screening, Checking whether a customer or beneficial owner is a politically exposed person, meaning someone entrusted with a prominent public function, or a close associate or family member. Under UAE anti-money-laundering rules, PEP relationships require enhanced due diligence, senior approval and closer monitoring because of higher risk. Definitions and steps are specific, so confirm the requirements with the relevant supervisory authority.
• Percentage-of-Completion Method, The percentage-of-completion approach recognises revenue and costs on a long-term contract in proportion to the progress made toward satisfying the performance obligation. Under IFRS 15 this falls within over-time recognition, where progress is measured using an input or output method to reflect how control transfers to the customer.
• Performance Materiality, An amount set by the auditor at less than overall materiality to reduce the probability that the total of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole. Lowering the threshold for procedures gives a margin for misstatements that individually fall below the overall materiality level.
• Periodic Inventory System, A periodic inventory system determines inventory and cost of sales only at intervals through a physical count, rather than updating records after every transaction. Cost of sales is derived from opening inventory plus purchases less closing inventory. It is simpler and cheaper but offers less timely control than a perpetual system.
• Permanent Establishment, A fixed place of business, or a dependent agent, through which a foreign company is treated as carrying on business in a country, creating a taxable presence there. Under UAE Corporate Tax, a non-resident with a permanent establishment in the UAE may be taxed on related income. Thresholds and exceptions apply; confirm the current definition with the FTA.
• Permanent Establishment (Corporate Tax), A fixed place of business or dependent agent through which a non-resident carries on business in the UAE, creating a taxable presence under Corporate Tax. Where a permanent establishment exists, the non-resident is taxed on income attributable to it. The concept follows internationally recognised principles with specific UAE conditions and exclusions. Confirm whether you have a permanent establishment with the FTA.
• Perpetual Inventory System, A perpetual inventory system updates inventory records continuously as each purchase and sale occurs, giving a real-time view of quantities and cost of sales. It supports tighter stock control and faster reporting, though periodic physical counts are still needed to confirm balances and detect shrinkage or recording errors.
• Personal Bank Account, A bank account held by an individual in the UAE for personal income and spending, distinct from any company account. Residents and, in some cases, non-residents can open one subject to the bank's requirements, often including an Emirates ID or proof of residency. Eligibility and documents differ between banks, so confirm the conditions with the relevant institution.
• Personal Data Protection Law (PDPL), The UAE federal data protection law, Federal Decree-Law No. 45 of 2021, which sets out general rules for processing personal data, the rights of individuals and obligations on controllers and processors. It is intended to apply across the UAE, while some free zones operate their own data laws. Implementing details and timelines apply, so confirm the current requirements before relying on them.
• Place of Supply, The VAT rule that determines in which country a supply of goods or services is treated as taking place, and therefore whose VAT rules apply. For UAE VAT, special rules cover goods, services, imports, exports and electronic services. Getting the place of supply right decides whether 5% UAE VAT, zero-rating or no UAE VAT applies. Confirm the rules with the FTA.
• Post-Dated Cheque, A cheque written with a future date, commonly used in the UAE for rent instalments and some financing or supplier arrangements so payment is intended only on or after that date. Cheques carry legal weight, and issuers should ensure funds are available to avoid penalties when presented. Practices and consequences can change, so confirm current rules with the relevant authority.
• Post-Dated Cheque (UAE), A cheque written with a future date, commonly used in the UAE for rent, instalments and supplier payments so that funds are drawn only on or after that date. The recipient usually presents it for clearing on the stated day. Sufficient funds must be available to avoid a bounced cheque and possible legal consequences. Practices and protections change over time, so confirm the position with a qualified adviser.
• Power of Attorney, A notarised legal document by which one person authorises another to act on their behalf in the UAE, for example to sign contracts, manage a company, operate bank accounts or handle property and court matters. It must usually be notarised, and if signed abroad it generally needs attestation and legalisation before use in the UAE. Scope and duration are defined in the document itself.
• Power of Attorney (Term), A legal document in which one person authorises another to act on their behalf in specified matters, such as signing contracts, managing a company or handling property in the UAE. To be effective it usually must be notarised, and powers of attorney issued abroad often need attestation and legal translation. Scope and validity vary, so confirm the wording and formalities with a notary or qualified adviser.
• Prepaid Expense, A payment made in advance for goods or services to be received in a future period, such as rent, insurance or software paid up front. It is recorded as a current asset and then charged to the income statement gradually as the benefit is used. This keeps costs matched to the periods they relate to under accrual accounting.
• Prepayment, A payment made in advance for goods or services to be received in a future period, recorded as an asset and then charged to expense as the benefit is consumed. Common examples include insurance and rent paid up front. It ensures costs are matched to the periods they relate to under the accrual basis.
• Presentation Currency, Presentation currency is the currency in which financial statements are presented, which may differ from the functional currency. Under IAS 21, results and position are translated from the functional currency into the presentation currency, with exchange differences typically recognised in other comprehensive income. UAE entities often present in AED.
• Price-to-Earnings Ratio, A valuation measure calculated as the market price per share divided by earnings per share, showing how much investors are willing to pay for each unit of profit. A higher ratio can reflect expectations of strong future growth, while a lower ratio may indicate modest expectations or perceived risk. It is most useful compared with peers.
• Principal versus Agent, The principal versus agent assessment in IFRS 15 determines whether an entity records revenue gross or net. A principal controls a good or service before it passes to the customer and reports the gross amount; an agent only arranges the supply and reports the net fee or commission earned for that service.
• Prior Period Error, A prior period error under IAS 8 is an omission or misstatement in earlier financial statements arising from a failure to use, or misuse of, reliable information that was available when those statements were authorised. Material errors are corrected retrospectively by restating comparatives or opening balances, not through current profit or loss.
• Private Clarification (FTA), A formal written response from the UAE Federal Tax Authority to a specific taxpayer who has submitted a clarification request about how the tax law applies to their own circumstances. Unlike a Public Clarification, it is addressed to the applicant and generally relied upon only by them. A fee usually applies. Confirm the request process and fees with the FTA.
• Private Joint Stock Company (PrJSC), A UAE company with share capital divided into shares that are not offered to the general public, sitting between an LLC and a public joint stock company. It is governed by the Commercial Companies Law and is often used by larger private groups that want a share-based structure without a public listing. Capital and governance rules apply, so confirm details with the relevant authority.
• Probation Period, An initial trial period at the start of UAE employment during which either party can end the contract on shorter notice, subject to the rules in the labour law. By law the probation period cannot exceed six months, and specific notice and reimbursement rules can apply if employment ends during it. Confirm the current notice and conditions with the relevant authority.
• Probationary Period (UAE), An initial trial phase at the start of UAE employment during which either party can assess suitability. Under the current Labour Law it may not exceed six months, and specific notice rules apply if either side ends the relationship during this time, including notice an employee must give before moving to another employer. Conditions can vary, so confirm the rules with MOHRE or a qualified adviser.
• Product Registration, The process of registering certain products with the relevant UAE authority before they can be legally imported or sold, common for food, health supplements, cosmetics, medicines and some consumer goods. Registration usually involves submitting product details, labelling and test or conformity documents for review and approval. The competent authority and exact requirements depend on the product type.
• Professional Licence, A UAE licence for businesses that provide professional or knowledge-based services, such as consultancy, accounting, legal, IT, medical or engineering work, where the skill of the individuals is the main asset. On the mainland it often allows full ownership with a local service agent for certain forms. Confirm ownership rules and approvals with the relevant authority.
• Professional Skepticism, Professional skepticism is the questioning mindset auditors must maintain throughout an engagement, remaining alert to conditions that may indicate misstatement due to error or fraud and critically assessing audit evidence. Required by the ISAs, it means not accepting management's explanations at face value and probing inconsistent or unusual matters.
• Profit Center, A division, product line or business unit that is held accountable for both its revenues and its costs, and therefore for its own profit. Treating part of a business as a profit centre lets management assess how much it contributes to overall results and supports clearer decisions on pricing, investment and resource allocation.
• Profit Margin Scheme, A VAT scheme that lets eligible businesses charge VAT only on the profit margin of certain goods, rather than the full selling price. It commonly applies to second-hand goods, antiques and collectibles bought without recoverable VAT. Strict eligibility and record-keeping conditions apply. Confirm whether your goods qualify for the scheme with the FTA.
• Provision, A liability of uncertain timing or amount recognised in the accounts when a business has a present obligation, it is probable that resources will be needed to settle it, and the amount can be estimated reliably. Common examples include warranties, legal claims and restructuring. A provision differs from a simple accrual mainly in the degree of uncertainty involved.
• Provision for Doubtful Debts, An estimated reduction in trade receivables for amounts the business may not collect, recognised as an expense so assets are not overstated. Under IFRS 9 this typically reflects expected credit losses. It is an allowance against receivables rather than a write-off of a specific confirmed bad debt.
• Provision versus Contingency, Under IAS 37, a provision is a liability of uncertain timing or amount that is recognised when an obligation is probable and can be reliably estimated. A contingent liability is only disclosed, not recognised, because the outflow is possible rather than probable or cannot be measured reliably. The distinction governs balance sheet treatment.
• Prudence Concept, Prudence is the exercise of caution when making judgements under uncertainty, so that assets and income are not overstated and liabilities and expenses are not understated. Reflected in the IFRS Conceptual Framework as support for neutrality, it underpins standards on provisions and impairment without permitting deliberate understatement of profit.
• Public Clarification (FTA), An official document published by the UAE Federal Tax Authority explaining how it interprets and applies the tax law to a particular issue or scenario. Public Clarifications are available to all taxpayers and help businesses apply VAT or Corporate Tax rules consistently. They can be amended or withdrawn, so always rely on the latest version published by the FTA.
• Public Joint Stock Company (PJSC), A UAE company whose capital is divided into tradable shares that can be offered to the public, typically used for large enterprises and those seeking a stock market listing. It is governed by the Commercial Companies Law and faces stricter governance, disclosure and capital rules than other forms. Listing and capital thresholds apply, so confirm current requirements with the relevant authority.
• Qualified Opinion, An audit opinion stating that the financial statements are fairly presented except for a specific matter the auditor identifies, such as a limited area of disagreement or an inability to obtain enough evidence. The issue is material but not pervasive, so the accounts remain broadly reliable apart from the qualified item, which the auditor describes in the report.
• Qualifying Activity, A category of activity that a qualifying free zone person can carry on and still earn income taxed at 0% under UAE Corporate Tax, as listed in Cabinet and Ministerial decisions. Examples can include certain manufacturing, holding of shares, treasury and logistics services, while some activities are specifically excluded. The lists change; confirm the current ones with the FTA.
• Qualifying Activity List, Under the UAE Corporate Tax free zone regime, the categories of activity that can generate qualifying income eligible for the 0% rate for a qualifying free zone person, as set out in Cabinet and Ministerial Decisions. Activities outside this list, or excluded activities, may be taxed differently. The lists are detailed and updated, so confirm the current scope with the Federal Tax Authority.
• Qualifying Free Zone Person, A free zone business that meets the UAE Corporate Tax conditions to benefit from a 0% rate on its qualifying income, with 9% applying to non-qualifying income. Conditions include maintaining adequate substance, earning qualifying income and meeting transfer pricing rules. The exact criteria are detailed; confirm eligibility with the FTA.
• Qualifying Group Relief, A UAE Corporate Tax relief allowing assets and liabilities to be transferred between members of the same qualifying group at no gain or loss, provided common ownership of at least the required percentage and other conditions are met. It supports internal reorganisations without triggering tax, subject to a clawback if conditions later fail. Confirm group conditions with the Federal Tax Authority.
• Qualifying Group Relief, A UAE Corporate Tax provision that allows assets and liabilities to be transferred between members of the same qualifying group, broadly under 75% common ownership, with no immediate tax gain or loss. It supports internal reorganisation without triggering Corporate Tax, subject to conditions and clawback rules. Confirm the qualifying group criteria with the FTA.
• Qualifying Income, Income earned by a qualifying free zone person that benefits from the 0% UAE Corporate Tax rate, as defined by Cabinet and Ministerial decisions. It typically covers certain transactions with other free zone persons and specified qualifying activities, while non-qualifying income is taxed at 9%. The definition is detailed and subject to change; confirm it with the FTA.
• Qualifying Income (Free Zone, Corporate Tax), Income earned by a Qualifying Free Zone Person that can benefit from the 0% Corporate Tax rate, provided strict conditions are met. It typically arises from qualifying activities and transactions with other free zone persons or certain foreign customers, subject to de minimis and substance requirements. Non-qualifying income may be taxed at the standard rate. Confirm what qualifies with the FTA.
• Qualifying Investment Fund, An investment fund that meets the conditions in the UAE Corporate Tax law and Cabinet decisions to be treated as an exempt person, so investors are generally taxed rather than the fund itself. Conditions typically cover regulation, diversity of ownership, the fund being the main activity and a primary purpose other than avoiding tax. Confirm criteria with the Federal Tax Authority.
• Qualifying Private Pension Fund, A private pension or social security fund that meets the conditions set under UAE Corporate Tax to be treated as an exempt person, so the fund's income is not taxed. Conditions generally cover the fund's purpose, regulation and not being used mainly to obtain a tax advantage, and require an application to and approval from the Federal Tax Authority. Confirm the criteria with the FTA.
• Qualifying Public Benefit Entity, A non-profit organisation, such as a charity or community body, that is listed in a Cabinet decision and operates for religious, charitable, scientific, educational or similar public benefit purposes. If it meets the conditions it is treated as exempt from UAE Corporate Tax. It must not distribute income to private parties. Confirm listing and reporting duties with the Federal Tax Authority.
• Quick Ratio, A stricter liquidity measure calculated as current assets less inventory, divided by current liabilities. By excluding inventory, which can be slow to convert to cash, it tests whether a business can meet short-term obligations from its more liquid assets such as cash and receivables. It is also widely known as the acid-test ratio.
• Real Beneficiary, Under UAE beneficial ownership rules, the natural person who ultimately owns or controls a company, typically through a sufficient shareholding or voting rights or by other means of control, as defined in Cabinet Decision No. 58 of 2020. Companies must identify their real beneficiaries and record them in a register. Thresholds and tests are specific, so confirm how they apply with your licensing authority.
• Realisation Basis (Corporate Tax), An accounting election under UAE Corporate Tax that lets a business recognise certain gains and losses only when assets or liabilities are actually realised, rather than on unrealised revaluations passing through the accounts. This can defer tax on paper movements in value. The election is subject to conditions and must be applied consistently. Confirm whether the realisation basis suits you with the FTA.
• Receivables Turnover, An efficiency measure calculated as credit sales divided by average trade receivables, indicating how quickly a business collects amounts owed by customers. A higher turnover suggests effective credit control and faster collection, whereas a falling ratio may signal lax credit terms or rising bad debt risk. It underpins the days sales outstanding figure.
• Reconciliation, The process of comparing two sets of records to confirm they agree and to explain any differences, such as matching the cash book to a bank statement or a supplier ledger to a statement. Regular reconciliations catch errors, omissions and fraud early, keep the accounts reliable and support a faster, cleaner audit and accurate tax filings.
• Recoverable Amount, Recoverable amount under IAS 36 is the higher of an asset's or cash-generating unit's fair value less costs of disposal and its value in use. If the carrying amount exceeds the recoverable amount, the difference is recognised as an impairment loss, writing the asset down to the amount the entity can actually recover.
• Recoverable Input VAT, The portion of input VAT that a registered business is entitled to reclaim because it relates to making taxable supplies. Recovery generally requires a valid tax invoice, an intention to use the cost for taxable activities and that the expense is not on the blocked list. Recoverable input tax is offset against output VAT in the return. Confirm recovery conditions with the FTA.
• Reducing-Balance Depreciation, A method that charges depreciation as a fixed percentage of an asset's carrying amount each period, giving higher charges in early years and lower ones later. It suits assets that lose value quickly or are most productive when new, and contrasts with the even charge of the straight-line approach.
• Registered Agent, A licensed firm or individual authorised to handle company formation and administrative dealings with a UAE authority on behalf of clients, commonly used by offshore and certain free zone regimes. The registered agent submits applications, files documents and acts as a point of contact with the registrar, but does not own or control the company itself. Its scope is defined by the relevant authority.
• Related Party, A person who is linked to a taxable person through ownership, control or kinship, as defined under UAE Corporate Tax. Examples include companies under common control and close family members. Transactions with related parties must meet the arm's length principle and may require transfer pricing documentation. Confirm the precise definition and tests with the FTA.
• Related Party (Corporate Tax), Persons connected through ownership, control or kinship under UAE Corporate Tax, such as companies under common control or close family members. Transactions between related parties must follow the arm's length principle and may require transfer pricing documentation. The definition is set out in Federal Decree-Law No. 47. Identifying related parties is key to compliance. Confirm who is a related party with the FTA.
• Related Party Disclosure, IAS 24 requires entities to disclose relationships, transactions and outstanding balances with related parties, such as parents, subsidiaries, key management and entities under common control. Disclosure is required even when no transactions occur for controlling relationships, helping users understand how related parties may affect financial position and results.
• Related Party Transaction, A transfer of resources, services or obligations between an entity and a party that can control or significantly influence it, such as owners, directors or group companies. Under IAS 24 these transactions and balances must be disclosed, since they may not be at arm's length and can affect the financial statements.
• Relevant Activity, Under UAE Economic Substance Regulations, a defined category of business activity that brings an entity within scope, such as holding company, headquarters, distribution and service centre, financing and leasing, and certain others. Scope depends on what a business actually does, not just its trade licence. Map your activities carefully and confirm current definitions with the relevant authority.
• Repatriation Cost, The expense of returning a sponsored employee to their home country at the end of employment, which under UAE rules is generally the employer's responsibility unless the worker moves to a new sponsor or the circumstances place the cost elsewhere. It typically covers a flight to the point of recruitment. The exact obligation depends on the contract and reason for leaving, so confirm with MOHRE or a qualified adviser.
• Reperformance, An audit procedure in which the auditor independently carries out a control or calculation that was originally performed as part of the entity's internal control or accounting process. By repeating the procedure and comparing results, the auditor obtains reliable evidence that the control operated correctly or that a figure was computed accurately.
• Representative Office, A UAE presence that lets a foreign company promote and market its products and gather market information, but not carry on commercial trading or earn revenue locally. It is treated as part of the parent and is often used as a low-footprint way to test the market before setting up a full branch or company. Its activities are limited by the terms of its licence.
• Research versus Development, IAS 38 distinguishes research from development phases of an internal project. Research costs, aimed at gaining new knowledge with no certain outcome, are always expensed. Development costs, applying research to produce a specific asset, are capitalised only when strict criteria such as technical feasibility and future benefits are met.
• Residence Visa, An official UAE document permitting a foreign national to live in the country for a set period, typically renewable, and obtained through sponsorship by an employer, family member, property or investment. It is linked to an Emirates ID and may allow the holder to sponsor dependants. Validity and conditions depend on the visa type, so confirm details with the relevant authority.
• Resident Person (Corporate Tax), A category of taxable person under UAE Corporate Tax, broadly covering companies incorporated in the UAE, foreign companies effectively managed and controlled in the UAE, and natural persons conducting business in the country. A resident person is generally taxed on its worldwide income, subject to reliefs and exemptions in the law. Confirm your residence status for Corporate Tax with the FTA.
• Residual Value, Residual value is the estimated amount an entity would currently obtain from disposing of an asset at the end of its useful life, after deducting expected disposal costs. Under IAS 16 it is deducted from cost to give the depreciable amount and, like useful life, is reviewed at least at each financial year-end.
• Restricted Goods, Goods that can be imported, exported or traded in the UAE only with prior approval or a permit from the competent authority, as distinct from prohibited goods, which are banned outright. Examples often include certain medicines, chemicals, weapons-related items, media content and some plants and animals. Importers must obtain the required clearances before the goods can be released by customs.
• Restructuring Provision, A restructuring provision under IAS 37 is recognised only when an entity has a detailed formal plan and has created a valid expectation in those affected that it will carry it out, for example by starting implementation or announcing the plan. It includes only direct expenditures necessarily entailed by the restructuring, not ongoing costs.
• Retained Earnings, The cumulative profits a company has kept rather than distributed to shareholders as dividends, carried forward within equity on the balance sheet. They can fund growth, repay debt or build reserves. Retained earnings rise with profits and fall with losses or dividend payments, showing how much of the company's earnings have been reinvested over time.
• Return on Assets, A profitability measure calculated as net profit divided by average total assets, indicating how efficiently a company uses its asset base to generate earnings. Because it ignores how assets are financed, it is useful for comparing operating performance across businesses with different capital structures. A higher figure reflects more productive asset use.
• Return on Capital Employed, A profitability and efficiency measure calculated as operating profit divided by capital employed, where capital employed is total assets less current liabilities. It shows how well a business generates operating returns from the long-term funds invested in it. Comparing it with the cost of capital indicates whether the company is creating value.
• Return on Equity, A profitability measure calculated as profit attributable to shareholders divided by average shareholders' equity, showing how much profit is generated from owners' invested funds. A higher return on equity indicates efficient use of capital, but it can be inflated by high gearing, so it is best assessed together with leverage and risk.
• Return on Investment, ROI is a profitability measure that compares the gain or loss from an investment with its cost, usually expressed as a percentage. It is calculated as net profit from the investment divided by the investment cost, times 100. ROI helps compare opportunities, but it ignores the timing of cash flows, so it is often used alongside NPV and IRR.
• Revaluation Model, The revaluation model under IAS 16 carries an item of property, plant and equipment at its fair value at the revaluation date, less subsequent depreciation and impairment. Revaluations must be kept sufficiently current, and upward gains are generally recognised in other comprehensive income within a revaluation surplus in equity.
• Revenue Recognition, Revenue recognition determines when and how much income an entity records from its activities. Under IFRS 15, revenue is recognised as performance obligations are satisfied and control passes to the customer, rather than simply when cash is received. Sound recognition policies prevent profit being overstated or pulled into the wrong period.
• Revenue Reserve, Accumulated profits a company retains from its ordinary trading activities rather than distributing them, forming part of equity and usually available for dividends or reinvestment. It contrasts with a capital reserve, which arises from capital transactions and is typically not distributable in the same way.
• Reverse Charge Mechanism, A VAT rule under which the recipient of a supply, rather than the supplier, accounts for the VAT. It commonly applies to imports of goods and services into the UAE from outside the country. The buyer reports both the output VAT and, where recoverable, the input VAT in the same return, often with no net cash cost. Confirm its scope with the FTA.
• Reverse Charge on Imports, An application of the reverse charge mechanism to goods and services brought into the UAE from abroad. Instead of paying VAT at the border or to a foreign supplier, the registered importer self-accounts for the import VAT in its VAT return, declaring it as output VAT and recovering it as input VAT where allowed. Confirm the import rules with the FTA.
• Reverse Charge on Services, A VAT rule under which a UAE business receiving certain services from a supplier outside the UAE accounts for the VAT itself instead of the foreign supplier charging it. The recipient reports output VAT and, where the cost relates to taxable activities, recovers it as input VAT in the same return. This commonly applies to imported services. Confirm the scope with the FTA.
• Right-of-Use Asset, A right-of-use asset represents a lessee's right to use a leased item over the lease term and is recognised under IFRS 16. It is initially measured at the lease liability plus initial direct costs and prepayments, then depreciated over the lease term or asset life. It appears alongside the related lease liability on the balance sheet.
• Salary Information File, A data file used in the UAE Wage Protection System that records each employee's agreed salary components, such as basic pay and allowances, so payments can be checked against contracts. It supports compliance and transparency in payroll. The required structure and the bodies that receive it can vary, so confirm the current format and obligations with the relevant authority.
• Sanctions Screening, The process by which UAE businesses check customers, beneficial owners and counterparties against sanctions lists, including United Nations lists and the UAE Local Terrorist List, before and during a relationship. Matches must generally be frozen and reported without delay. Screening should be repeated when lists change. Confirm the required lists, frequency and escalation steps with the relevant supervisory authority.
• Segment Reporting, The disclosure of financial information about the distinct operating parts of a business, such as product lines or geographic regions. Under IFRS 8 segments are identified based on how management reviews performance, helping users understand the different activities, risks and returns within a single reporting entity.
• Segment Reporting (IFRS 8), IFRS 8 requires listed entities to disclose information about operating segments based on the internal reports the chief operating decision maker uses to allocate resources and assess performance. This management approach reports segment revenue, profit, assets and other measures so users can evaluate the different business activities and economic environments.
• Segregation of Duties, Segregation of duties is a control that divides responsibility for authorising, recording and holding custody of assets among different people, so no single individual controls a whole transaction. It reduces the risk of error and fraud, and is a core element auditors evaluate when assessing the strength of an entity's internal control system.
• Share Capital (UAE), The amount of capital that a company's shareholders contribute in exchange for shares, recorded in the memorandum of association and within equity on the balance sheet. Requirements differ by jurisdiction and activity, and some free zones or licences specify minimum or stated capital. Confirm current capital requirements for your structure with the relevant authority.
• Share Transfer, The legal process of transferring ownership of shares in a UAE company from one party to another. It typically requires a sale or transfer agreement, board or shareholder approval, amendment of the memorandum of association and, for mainland LLCs, notarisation and updating the licence with the relevant economic department. Some activities also need prior approval from sector regulators.
• Share Transfer (Term), The legal process of moving ownership of shares in a UAE company from one party to another, which usually requires amending the memorandum of association and updating the licence and shareholder records. For many company types the transfer must be notarised and approved by the licensing authority. Approvals, fees and any pre-emption rights apply, so confirm the procedure with a notary or qualified adviser.
• Share-Based Payment, Share-based payment, governed by IFRS 2, is a transaction in which an entity receives goods or services in exchange for its own equity instruments, such as share options, or for cash amounts based on its share price. Equity-settled awards are measured at grant-date fair value and expensed over the vesting period.
• Shared Office, A workspace arrangement in the UAE where multiple businesses use a common office, often with hot desks or coworking areas, to satisfy the requirement for a registered address while controlling costs. It can support a limited number of employment visas depending on the provider and authority. Confirm whether a shared office meets your licence and visa needs with the relevant authority.
• Sick Leave (UAE), Paid and unpaid medical leave available to UAE private sector employees after completing probation. The current law allows up to 90 days of sick leave per year, typically the first 15 days on full pay, the next 30 on half pay and the remainder unpaid. A medical report is usually required. Entitlements and conditions can change, so confirm the position with MOHRE or a qualified adviser.
• Simplified Tax Invoice, A shorter form of tax invoice that a VAT-registered supplier may issue in certain cases, such as retail sales or where the recipient is not registered and the value is below a set limit. It carries fewer mandatory details than a full tax invoice but must still show key information and the VAT charged. Confirm when a simplified invoice is allowed with the FTA.
• Single Composite Supply, A supply made up of more than one component that, for VAT purposes, is treated as one supply because the elements are so closely linked they form a single economic transaction. The whole supply usually takes the VAT treatment of its principal component. This matters when components would otherwise be taxed differently. Confirm whether your bundle is a single composite supply with the FTA.
• Small Business Relief, A UAE Corporate Tax relief that lets eligible resident persons elect to be treated as having no taxable income when their revenue stays at or below AED 3 million in the current and prior tax periods. It reduces tax and simplifies compliance. The relief is time-limited under current rules, so confirm eligibility and the applicable periods with the FTA.
• Small Business Relief (Corporate Tax), A relief under UAE Corporate Tax that allows eligible resident persons with revenue below a set threshold to be treated as having no taxable income for a tax period, simplifying their obligations. Electing businesses still register and file but can avoid detailed tax computations while relief applies. The threshold and end date are set by decision. Confirm eligibility and current limits with the FTA.
• Sole Establishment, A UAE mainland business owned by a single natural person who is personally liable for its obligations, rather than a separate company with limited liability. It is licensed through the relevant economic department and suits certain professional or trading activities. Ownership and liability features differ from an LLC. Confirm eligibility, permitted activities and any requirements with your licensing authority.
• Sole Proprietorship (UAE), A business owned and run by a single individual who is personally responsible for all its debts and obligations, with no separation between owner and business. In the UAE it is often used for professional activities and may need a local service agent depending on the owner's nationality and the activity. Confirm the ownership and liability position with the relevant authority.
• Solvency, A measure of a company's ability to meet its long-term financial obligations and continue operating into the future. A solvent business has assets that exceed its liabilities and can service its debt over time. Solvency differs from liquidity, which focuses on the short term, and is often assessed using gearing and debt-to-equity ratios.
• Source of Funds, Information showing where the specific money used in a transaction or relationship comes from, such as salary, business income, a loan or a sale of assets. UAE anti-money-laundering rules require covered businesses to understand and, for higher-risk cases, verify source of funds as part of customer due diligence. Expectations vary by risk, so confirm requirements with the relevant supervisory authority.
• Source of Wealth, Information explaining how a customer or beneficial owner accumulated their overall wealth over time, for example through business ownership, inheritance, investments or employment. UAE anti-money-laundering rules expect covered businesses to understand source of wealth in higher-risk situations, including for politically exposed persons. It is broader than source of funds, so confirm the standards with the relevant supervisory authority.
• Standard-rated Supply, A supply of goods or services on which VAT is charged at the UAE standard rate of 5%. Most domestic sales fall into this category unless they are specifically zero-rated or exempt. The supplier collects the 5% output VAT and reports it to the Federal Tax Authority (FTA) in its VAT return. Confirm which of your supplies are standard-rated with the FTA.
• Standard-Rated Supply (5%), A supply of goods or services that is subject to UAE VAT at the standard rate of 5%. Most domestic sales fall into this category unless the law specifically zero-rates or exempts them. The supplier charges output VAT, issues a tax invoice and reports the amount in the VAT return. Confirm the correct treatment of any supply with the FTA.
• State-Sourced Income (Corporate Tax), Income that is treated as arising in the UAE under Corporate Tax rules, regardless of where the recipient is based. It can include income from activities performed, assets located or rights used in the UAE, and amounts paid by UAE residents. State-sourced income is relevant in taxing non-residents and applying any withholding. Confirm what counts as state-sourced income with the FTA.
• Statement of Changes in Equity, The statement of changes in equity, required by IAS 1, reconciles the opening and closing balance of each component of equity. It shows total comprehensive income for the period, transactions with owners such as dividends and share issues, and the effect of any retrospective adjustments for policy changes or error corrections.
• Statutory Audit, An audit required by law or by a licensing authority rather than chosen voluntarily. The auditor must be independent and appropriately registered for the jurisdiction. In the UAE, audit obligations vary by free zone, licence and size, and financial free zones such as DIFC and ADGM keep their own approved auditor panels. Confirm current requirements with the relevant authority.
• Stock Take, A physical count of inventory on hand, compared against the accounting records to confirm quantities and identify shortages, damage or errors. It supports accurate inventory valuation and is a key source of audit evidence, with external auditors often attending the count to verify the existence and condition of stock.
• Straight-Line Depreciation, A method of spreading the cost of a fixed asset evenly over its useful life by charging the same amount of depreciation each period. The annual charge is the cost less residual value divided by the useful life. It is simple and widely used where an asset delivers benefits consistently over time.
• Subsequent Events, Events occurring between the reporting date and the date the financial statements are authorised for issue. Under IAS 10, adjusting events provide evidence of conditions existing at the reporting date and change the figures, while non-adjusting events are disclosed if material. Auditors perform procedures to identify them.
• Subsidiary Ledger, A detailed ledger that records the individual accounts making up a single general ledger control account, such as the separate balances owed by each customer or supplier. The total of all subsidiary ledger balances should agree with the related control account in the general ledger, supporting accuracy and reconciliation.
• Substance Over Form, Substance over form means transactions should be accounted for according to their economic reality rather than merely their legal form. It ensures financial statements faithfully represent what has actually happened, for example treating a finance lease like a financed purchase, and helps prevent arrangements being structured purely to flatter the accounts.
• Substance Requirements (Free Zone, Corporate Tax), Conditions requiring a Qualifying Free Zone Person to have adequate economic presence in the UAE, including sufficient assets, qualified employees and operating expenditure, to carry out its core income-generating activities. Meeting these substance requirements is essential to keep the 0% Corporate Tax rate on qualifying income. Outsourcing is allowed within limits. Confirm the substance conditions with the FTA.
• Substantive Testing, Audit procedures designed to detect material misstatements in account balances, transactions and disclosures. They include tests of detail, such as verifying individual items to supporting evidence, and substantive analytical procedures. They provide direct evidence about whether the financial statements are free from material error.
• Suspense Account, A temporary account used to hold entries that cannot yet be classified correctly, often when a trial balance fails to balance or a transaction lacks complete information. It is a holding place only and should be investigated and cleared to the proper accounts before financial statements are finalised.
• Suspicious Activity Report, A confidential report filed through the UAE goAML system to the Financial Intelligence Unit when a reporting entity knows or suspects that funds or a transaction may relate to money laundering, terrorist financing or other crime. Filing is a legal duty for covered businesses and tipping off the customer is prohibited. Confirm your reporting obligations and indicators with the relevant supervisor.
• Suspicious Transaction Report, A confidential report that in-scope UAE businesses must file with the Financial Intelligence Unit through the goAML portal when they suspect that funds relate to a crime or to money laundering or terrorist financing. There is no minimum amount; suspicion is the trigger. Tipping off the customer is prohibited. Confirm current reporting thresholds and procedures with the regulator.
• SWIFT Code, A standard bank identifier, also called a BIC, used to route international payments to the correct bank and branch, including for transfers to and from the UAE. Combined with an IBAN, it ensures cross-border transfers reach the right account. Each bank has its own SWIFT code, so confirm the correct code for your transaction with the relevant bank.
• SWIFT Transfer, An international bank-to-bank payment sent through the SWIFT messaging network, widely used by UAE businesses to pay overseas suppliers or receive funds from abroad. Each transfer uses the recipient bank's SWIFT or BIC code together with account details such as the IBAN. Charges, exchange rates and timing depend on the banks involved. Confirm the fees and required details with your bank before sending.
• Targeted Financial Sanctions, Measures requiring UAE businesses to freeze the funds of, and not deal with, persons and entities listed under United Nations sanctions and the UAE's own Local Terrorist List. Covered entities must screen against these lists, report matches and act without delay. Lists are updated frequently. Confirm your screening, freezing and reporting obligations with the relevant UAE supervisory authority.
• Tax Agent, A person registered with the UAE Federal Tax Authority (FTA) who is authorised to act on a taxpayer's behalf in dealings with the FTA, such as filing returns, responding to queries and managing audits. Tax agents must meet qualification and registration requirements. Appointing one is optional but can help with compliance. Confirm the current rules with the FTA.
• Tax Assessment, A determination by the UAE Federal Tax Authority of the tax a person owes, often issued after a tax audit or where returns are missing or incorrect. An assessment may include additional tax and administrative penalties. Taxpayers can usually seek reconsideration or object within set deadlines. Confirm the current assessment, objection and appeal procedures with the FTA.
• Tax Audit (FTA), An examination by the UAE Federal Tax Authority of a taxable person's records, returns and systems to check that tax has been correctly reported and paid. The FTA may request documents, visit premises and review accounting data. Keeping accurate records and valid tax invoices helps an audit run smoothly. Confirm your retention obligations and audit rights with the FTA.
• Tax Clarification Request, A formal application made to the UAE Federal Tax Authority asking how the tax law should be applied to a specific situation. If accepted, the FTA issues a private clarification addressed to the applicant. Requests usually require supporting facts and a fee, and they are not a substitute for filing. Confirm the eligibility criteria, fees and turnaround times with the FTA.
• Tax Credit Note, A document issued by a VAT-registered supplier to correct or reduce the VAT previously charged on a tax invoice, for example after a discount, return or cancellation. It must reference the original invoice and show the adjustment so both parties can amend the VAT reported in their returns. Strict content and timing rules apply. Confirm the requirements for credit notes with the FTA.
• Tax Domicile Certificate, Another name often used for the UAE tax residency certificate, a document confirming residency for tax treaty purposes. It can support claims to reduce or avoid foreign withholding taxes under a double taxation agreement. Whether a particular treaty recognises the certificate depends on its terms and the applicant's facts. Confirm the issuing process and acceptance with the Federal Tax Authority.
• Tax Group, An arrangement allowing two or more eligible UAE companies under common ownership to be treated as a single taxable person for Corporate Tax, filing one return and generally ignoring transactions between members. Strict conditions on ownership and residency apply, and forming a group has consequences for losses and liability. Confirm eligibility and the application process with the Federal Tax Authority.
• Tax Grouping Conditions, Requirements that resident companies must satisfy to form a single tax group and file one consolidated UAE Corporate Tax return. These usually include a parent holding the required share of capital, voting and profit rights, the same financial year, the same accounting standards and that no member is exempt or a qualifying free zone person. Confirm the conditions with the Federal Tax Authority.
• Tax Invoice, A document a VAT-registered supplier must issue for taxable supplies, showing prescribed details such as the supplier's Tax Registration Number, the VAT amount and the rate applied. A valid tax invoice is normally required before the buyer can recover input VAT. Simplified invoices are allowed in some cases. Confirm the required contents with the FTA.
• Tax Loss Carry Forward, Under UAE Corporate Tax (Federal Decree-Law No. 47 of 2022), a tax loss made in one period can generally be carried forward and used to reduce taxable income in later periods, subject to ownership-continuity and same-or-similar business conditions and an annual offset cap expressed as a percentage of taxable income. Confirm the rules with the Federal Tax Authority.
• Tax Loss Relief (Corporate Tax), A mechanism under UAE Corporate Tax that lets a business offset losses from one tax period against taxable income of later periods to reduce future tax. The amount that can be used in any year may be restricted to a percentage of taxable income, and continuity-of-ownership or activity conditions can apply. Unused losses may carry forward. Confirm the loss relief rules with the FTA.
• Tax Period (Corporate Tax), The period for which a taxable person prepares accounts and calculates UAE Corporate Tax, generally the financial year used in its financial statements. The return must be filed and any tax paid within the deadline after the period ends. A first or final period can be shorter or longer in specific cases. Confirm your tax period and filing deadline with the FTA.
• Tax Registration Number, A unique number, often abbreviated TRN, issued by the UAE Federal Tax Authority (FTA) when a business or person registers for VAT or Corporate Tax. The TRN must appear on tax invoices and is used in all tax filings and correspondence with the FTA. Customers can verify a supplier's TRN through the FTA. Confirm registration requirements with the FTA.
• Tax Residency, The status that determines where a person or company is treated as resident for tax purposes. The UAE has specific criteria for individuals and entities and issues a Tax Residency Certificate, which can help access double tax treaties. Tests often consider days of presence or place of management. Confirm current criteria and certificate rules with the FTA.
• Tax Residency Certificate, An official certificate issued in the UAE confirming that a person or company is a tax resident, often used to claim benefits under a double taxation agreement. Applications are typically made to the Federal Tax Authority and require evidence of presence or activity in the UAE. Eligibility conditions and processes apply and can change, so confirm the current requirements with the FTA.
• Tax Residency Certificate, An official document issued by the UAE Federal Tax Authority (FTA) confirming that a person or company is tax resident in the UAE. It is mainly used to claim benefits under double taxation agreements with other countries. Applicants must meet residency criteria and apply through the FTA. Confirm the current eligibility conditions and process with the FTA.
• Taxable Income (Corporate Tax), The amount on which UAE Corporate Tax is charged, generally starting from accounting net profit prepared under acceptable standards and then adjusted for items the law treats differently. Adjustments include exempt income, non-deductible expenses and specific reliefs. The resulting figure is multiplied by the applicable rate to find the tax due. Confirm how to compute taxable income with the FTA.
• Taxable Income (Corporate Tax), The profit figure on which UAE Corporate Tax is charged, broadly the accounting net profit adjusted for specific additions, deductions, exemptions and reliefs set out in Federal Decree-Law No. 47 of 2022. The 9% rate applies to taxable income above AED 375,000. Calculating it correctly is central to compliance. Confirm the adjustment rules with the FTA.
• Taxable Income Adjustment, The process of adjusting accounting net profit to arrive at taxable income under UAE Corporate Tax. Adjustments include adding back non-deductible expenses, removing exempt income such as qualifying dividends, applying interest-deduction limits and reflecting reliefs. The result is the figure on which the tax rate is applied. Confirm the required adjustments with the Federal Tax Authority.
• Taxable Person, Any person, whether an individual or an entity, who conducts business and is registered or required to register for tax in the UAE. The term is used in both the VAT and Corporate Tax laws, though the precise definitions differ. A taxable person must meet registration, filing and record-keeping duties. Confirm whether you qualify as a taxable person with the FTA.
• Taxable Person (Corporate Tax), Under Federal Decree-Law No. 47 of 2022, a person within the scope of UAE Corporate Tax. This includes resident juridical persons, certain natural persons carrying on business and non-residents with a UAE nexus or permanent establishment. A taxable person must register, file a return and pay any tax due on taxable income. Confirm whether you are a taxable person with the FTA.
• Taxable Person Register, The record maintained by the UAE Federal Tax Authority of persons registered for a tax such as VAT or Corporate Tax, each identified by a Tax Registration Number. Registration brings duties to charge tax where relevant, file returns and keep records. Details on the register must be kept up to date. Confirm registration requirements and how to update details with the FTA.
• Taxable Supply, A supply of goods or services made in the UAE in the course of business on which VAT is chargeable, whether at the standard 5% rate or the 0% rate. Taxable supplies are counted towards the VAT registration thresholds. Exempt supplies are not taxable supplies. Confirm how a particular transaction is classified with the UAE Federal Tax Authority (FTA).
• Telegraphic Transfer, An electronic bank-to-bank transfer of funds, commonly used in the UAE for paying overseas suppliers and receiving export payments. Typically routed through the SWIFT network, it requires the beneficiary's bank details, IBAN or account number and SWIFT code, and may attract charges and exchange-rate costs. Larger or cross-border transfers can require supporting documents for compliance.
• Temporary Admission (Customs), A customs procedure allowing goods to be imported into the UAE for a limited time without paying duty, on condition they are re-exported in the same state. It is commonly used for exhibitions, repairs, professional equipment and similar purposes, often supported by a guarantee. Failing to re-export within the period can trigger duty and penalties. Confirm the conditions and time limits with UAE Customs.
• Temporary Difference, A temporary difference is the gap between the carrying amount of an asset or liability in the accounts and its tax base. Taxable temporary differences create deferred tax liabilities, while deductible differences create deferred tax assets. These differences reverse over time and are the foundation of deferred tax accounting under IAS 12.
• Test of Controls, An audit procedure that evaluates whether a client's internal controls are designed and operating effectively to prevent or detect misstatements. When controls are reliable, the auditor may reduce substantive testing. The results help assess control risk and shape the nature, timing and extent of further audit work.
• Test of Details, A substantive audit procedure that examines individual transactions, account balances or disclosures to obtain direct evidence about their validity and accuracy. Examples include agreeing a sales figure to an invoice and dispatch note or confirming a receivable with a customer. It complements analytical procedures within the auditor's substantive testing.
• Tolerable Misstatement, The application of performance materiality to a particular sampling procedure, representing the maximum monetary error the auditor is willing to accept in a population while still concluding it is not materially misstated. It is set below the materiality relevant to the balance so that aggregated errors remain within acceptable limits.
• Tourism Licence, A UAE licence for businesses operating in the travel and tourism sector, including travel agencies, tour operators, hotels and related activities. It generally requires approval from the relevant tourism authority, such as Dubai's Department of Economy and Tourism, in addition to the standard trade licence. Confirm the activity codes and approvals with the relevant authority.
• Tourist VAT Refund, A scheme that lets eligible overseas visitors reclaim VAT paid on qualifying goods bought in the UAE and taken out of the country, subject to conditions and validation at the point of departure. Purchases must be made at participating retailers and meet minimum spend and export-evidence rules. The refund is processed through the operator appointed by the FTA. Confirm eligibility and the process with the FTA.
• Tracing, A directional test where the auditor starts with a source document and follows it forward into the accounting records to confirm it was captured. Tracing from source to records mainly tests completeness, helping detect understatement where genuine transactions, such as sales or liabilities, may have been omitted from the financial statements.
• Trade Finance, A range of banking products that help UAE businesses fund and secure domestic and international trade, including letters of credit, bank guarantees, bills for collection, invoice financing and working-capital facilities. These tools manage payment risk and cash-flow gaps between buying and selling. Eligibility and pricing vary by provider, so confirm the options with the relevant bank.
• Trade Finance (Term), A range of banking products that help UAE businesses fund and secure the buying and selling of goods, including letters of credit, guarantees, bills for collection and invoice financing. These tools bridge the gap between shipping goods and receiving payment and reduce the risk of non-payment in cross-border deals. Products and eligibility differ by bank. Confirm the suitable facilities with your bank or trade adviser.
• Trade Licence, The official permit a business needs to operate legally in the UAE, issued by the relevant emirate's economic department for mainland companies or by the authority of the chosen free zone. It defines the permitted activities and must usually be renewed annually, sometimes alongside audited accounts. Confirm current licensing categories, conditions and renewal requirements with the relevant authority.
• Trade Name, The official name under which a UAE business operates and is registered on its licence. It must follow naming rules set by the economic department, avoid offensive or restricted words and not duplicate an existing name. Reserving the trade name is usually one of the first steps in company formation. Confirm naming conventions and reservation validity with the relevant authority.
• Trade Name Reservation, The process of registering and reserving a unique company name with the UAE licensing authority so it cannot be used by others while the application proceeds. The name must follow naming rules, avoid prohibited or offensive words and reflect the activity or owners. Reservations are time-limited and may carry a fee, so confirm the rules and validity with the relevant authority.
• Transaction Price, The transaction price under IFRS 15 is the amount of consideration an entity expects to be entitled to in exchange for transferring promised goods or services, excluding amounts collected for third parties such as VAT. Determining it is step three of the five-step model and includes adjusting for variable amounts and financing.
• Transfer of Tax Losses (Corporate Tax), A provision allowing tax losses to be transferred between UAE resident companies that meet common-ownership and other conditions, so a loss in one company can reduce the taxable income of another in the same group. Specific ownership thresholds and timing requirements must be satisfied. It helps groups use losses efficiently. Confirm whether your companies qualify to transfer losses with the FTA.
• Transfer Pricing Documentation, Records that show how a business has applied the arm's length principle to transactions with related parties and connected persons. Under UAE Corporate Tax this can include a master file and local file for larger taxpayers, plus a disclosure form. Thresholds determine who must keep which documents. Confirm the current documentation requirements with the FTA.
• Transitional Rules, Provisions that govern how a business moves into the UAE Corporate Tax regime in its first tax period. They set the opening balance sheet as the starting point and can allow certain pre-regime gains on assets such as property, intangibles and financial instruments to be excluded from tax, subject to conditions and elections. Confirm the transitional treatment with the Federal Tax Authority.
• Trial Balance, A report listing the closing balance of every account in the general ledger at a point in time, with total debits set against total credits. If the two totals agree, the ledger is arithmetically balanced, though this does not guarantee it is free of all errors. The trial balance is the working basis for preparing the financial statements.
• True and Fair View, A true and fair view means financial statements present the entity's position and performance faithfully and free from material misstatement, in line with the applicable framework. It is the overarching objective auditors assess when forming an opinion, and is closely linked to fair presentation under IAS 1 and faithful representation.
• UAE Corporate Tax, A federal tax on business profits introduced in the UAE for financial years starting on or after 1 June 2023. The headline rate is 9% on taxable income above AED 375,000 and 0% on income up to that threshold, with relief available to qualifying free zone persons. Always confirm current rules, rates and exemptions with the FTA.
• UAE VAT, Value Added Tax, an indirect tax on most goods and services in the UAE since 1 January 2018, charged at a standard rate of 5%. Some supplies are zero-rated or exempt. Businesses above the mandatory registration threshold must register, charge VAT and file returns with the FTA. Confirm current thresholds and rules with the FTA.
• UBO Register, A record most UAE companies must maintain identifying their ultimate beneficial owners, capturing details such as name, nationality, date and place of birth, address, identification documents and the basis on which each person became a UBO. It is usually kept alongside registers of shareholders and nominee directors and disclosed to the relevant authority. Confirm current filing requirements with your registrar.
• Ultimate Beneficial Owner, The natural person who ultimately owns or controls a company, typically through holding 25% or more of its shares or voting rights, directly or indirectly, or by other means of control. Where no one meets the ownership tests, the person controlling by other means, or a senior managing official, may be recorded. UBO rules are part of the UAE's AML framework.
• Ultimate Beneficial Owner Regulation, UAE rules, set out mainly in Cabinet Decision No. 58 of 2020, requiring most companies to identify and disclose the natural persons who ultimately own or control them and to maintain registers of beneficial owners, partners and nominee directors. Registers are filed with the relevant registrar. Requirements and exemptions vary, so confirm what your entity must file with its licensing authority.
• Ultimate Parent Entity, The top company in a multinational group that, directly or indirectly, controls the other group members and prepares consolidated financial statements, with no parent above it. It is central to country-by-country reporting, which the ultimate parent typically files for the whole group. The concept also matters for some tax and transparency rules. Confirm how it applies to your group with the relevant authority.
• Unearned Revenue, Amounts a business has been paid for goods or services it has not yet delivered, recognised as a liability rather than income until the performance obligation is met. Under IFRS 15 it is often shown as a contract liability and released to revenue as the goods or services are provided over time or at a point in time.
• Unincorporated Partnership, A contractual partnership without separate legal personality. By default under UAE Corporate Tax it is treated as fiscally transparent, meaning each partner is taxed on their share of income rather than the partnership being a taxable person in its own right. Partners may apply to have it treated as a taxable person instead. Confirm treatment and elections with the Federal Tax Authority.
• Unlimited Contract, A former type of open-ended UAE employment contract with no fixed end date, which either party could terminate with notice. Under recent labour reforms private-sector contracts have moved to fixed-term agreements, so unlimited contracts have largely been phased out and converted. Because the framework has changed, confirm the current contract requirements with the relevant authority.
• Unqualified Opinion, Often called a clean opinion, this is the auditor's conclusion that the financial statements give a true and fair view and comply, in all material respects, with the applicable framework such as IFRS. It is the most favourable outcome of an audit and signals to banks, investors and authorities that the auditor found no material misstatements requiring qualification.
• Useful Life, Useful life is the period over which an asset is expected to be available for use by an entity, or the number of production units expected from it. Under IAS 16 it drives the depreciation charge and must be reviewed at least annually, with any revision treated as a change in accounting estimate.
• Valuation Assertion, The valuation and allocation assertion is the claim that assets, liabilities and equity are included in the financial statements at appropriate amounts, with any resulting adjustments properly recorded. Auditors test valuation by reviewing estimates, impairment, provisions and measurement bases, which often involve significant judgement and risk.
• Value in Use, Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit, discounted at a pre-tax rate reflecting current market assessments and the asset's specific risks. Under IAS 36 it is one of the two measures, alongside fair value less costs of disposal, of recoverable amount.
• Variable Consideration, Variable consideration is the portion of an IFRS 15 transaction price that can change due to discounts, rebates, refunds, penalties or performance bonuses. An entity estimates it using the expected value or most likely amount method, and only includes it to the extent a significant reversal of recognised revenue is highly probable.
• Variance Analysis, The process of comparing actual financial results with budgeted or forecast figures and explaining the differences, known as variances. A variance can be favourable or adverse. Analysing why revenues, costs or volumes differed from plan helps managers understand performance, hold teams accountable and take corrective action.
• VAT 201 Return, The official VAT return form submitted to the UAE Federal Tax Authority through EmaraTax, commonly referred to as the VAT 201. It summarises output VAT on sales, recoverable input VAT on purchases, adjustments and the net VAT payable or refundable for the tax period. It must be filed and paid by the due date. Confirm your filing period and deadlines with the FTA.
• VAT Deregistration, The process of cancelling a VAT registration with the UAE Federal Tax Authority (FTA), for example when a business stops making taxable supplies or its turnover falls below the registration thresholds. Deregistration must be applied for within set deadlines, and late applications can attract penalties. Confirm the current conditions and timelines with the FTA.
• VAT Fraction, The formula used to work out the VAT element contained within a VAT-inclusive price. For a 5% rate this is one twenty-first of the gross amount, allowing a business to separate the net value from the tax already embedded in a tax-inclusive figure. It is commonly used for retail and simplified invoices. Confirm the correct calculation method for your prices with the FTA.
• VAT Group, An arrangement allowing two or more related UAE businesses under common control to register for VAT as a single taxable person with one Tax Registration Number. Supplies between group members are generally ignored for VAT, and the group files a single return. Eligibility conditions apply. Confirm whether grouping suits your structure with the FTA.
• VAT Import Deferral, A mechanism that lets a VAT-registered importer account for import VAT through the VAT return rather than paying it in cash at the point of entry. The importer declares the VAT due and, where recoverable, claims the same amount as input tax in the same return, often producing no net cash outflow. Confirm eligibility and the EmaraTax process with the FTA.
• VAT on Digital Services, The VAT treatment of electronically supplied services such as software, streaming, hosting and online subscriptions. Where these are consumed in the UAE, VAT can apply, with place-of-supply and reverse charge rules determining who accounts for the tax. Non-resident suppliers to UAE customers may have registration obligations. Confirm the rules for your digital supplies with the FTA.
• VAT on Exports of Goods, The VAT treatment of goods physically moved from the UAE to outside the GCC implementing states. Such exports can be zero-rated, meaning VAT is charged at 0% but the supplier may still recover related input tax, provided strict evidence of export is retained within set time limits. Missing documentation can change the treatment. Confirm the conditions and proof required with the FTA.
• VAT Place of Residence, The location used under UAE VAT law to determine where a supplier or customer is established, which affects place-of-supply rules and whether the reverse charge applies. A person can have a place of residence in the UAE through a place of establishment or a fixed establishment. It influences how cross-border services are taxed. Confirm your status with the FTA.
• VAT Record Retention, The legal obligation to keep VAT-related books, invoices, credit notes and supporting documents for a minimum period set by UAE law so the Federal Tax Authority can inspect them. Records relating to real estate may need to be kept for longer. Proper retention supports input tax claims and protects against penalties during a tax audit. Confirm the exact retention periods with the FTA.
• VAT Refund, A repayment from the UAE Federal Tax Authority (FTA) when a business's recoverable input VAT exceeds the output VAT due in a period, or under special schemes such as those for tourists, foreign businesses or new residential property. Refunds are claimed through EmaraTax and may be reviewed before payment. Confirm eligibility and the process with the FTA.
• VAT Registration, The process of enrolling a business with the UAE Federal Tax Authority (FTA) for Value Added Tax through the EmaraTax portal to obtain a Tax Registration Number. Once registered, a business must charge 5% VAT on standard-rated supplies, file periodic returns and keep proper records. Confirm current thresholds and procedures with the FTA.
• VAT Return, A periodic report a VAT-registered business files with the UAE Federal Tax Authority (FTA), usually quarterly or monthly, summarising output VAT charged on sales and input VAT incurred on purchases. The difference is the net VAT payable or refundable. Returns are filed and paid through EmaraTax. Confirm your filing period and deadlines with the FTA.
• VAT Rounding, The approach used to round the VAT amount shown on an invoice when the calculated figure is not a whole fils. UAE VAT rules set out how amounts should be rounded, typically to the nearest fils on a mathematical basis, to keep invoicing consistent and avoid systematic under or overcharging of tax. Confirm the acceptable rounding method for your invoices with the FTA.
• VAT Tourist Refund Scheme, A UAE Federal Tax Authority scheme that lets eligible overseas tourists reclaim VAT paid on qualifying goods bought from registered retailers and taken out of the country, subject to conditions. Refunds are processed through the operator's validation points at departure, usually airports and other exits. Eligibility, minimum spend and procedures are set by the FTA and the appointed operator.
• VAT Voluntary Disclosure (Form 211), A submission made through EmaraTax, commonly known as Form 211, used to notify the Federal Tax Authority of an error or omission in a previously filed VAT return or assessment. Filing it lets a taxpayer correct mistakes, though related tax and penalties may apply depending on timing. It is part of good VAT compliance. Confirm when a voluntary disclosure is required with the FTA.
• VAT Zero-Rating Conditions, The specific requirements that must be met for a supply to qualify for the 0% VAT rate rather than the standard rate. Conditions vary by category, such as exports, international transport, certain healthcare and education, and often depend on holding supporting evidence within prescribed time frames. Failing the conditions can make the supply standard-rated. Confirm the exact conditions with the FTA.
• Voluntary Disclosure, A formal way for a taxpayer to notify the UAE Federal Tax Authority (FTA) of an error or omission in a previously filed VAT or Corporate Tax return, or in a refund claim, and correct it. Making a timely voluntary disclosure can reduce penalties compared with errors found during an audit. Confirm the thresholds, forms and penalty rules with the FTA.
• Voluntary Disclosure Form, A submission made through EmaraTax that allows a taxpayer to correct an error or omission in a previously filed UAE tax return or refund application. Disclosing voluntarily can reduce exposure compared with errors found during an audit, though penalties may still apply depending on timing and amounts. Confirm the thresholds, deadlines and penalty treatment with the Federal Tax Authority.
• Voluntary Registration Threshold, The level of taxable supplies, imports or taxable expenses above which a UAE business may choose to register for VAT even though registration is not yet compulsory, currently AED 187,500. Voluntary registration can let a start-up recover input VAT before it reaches the mandatory threshold. Confirm the current figure and conditions with the FTA.
• Vouching, A directional test where the auditor selects an item recorded in the accounting records and traces it back to the underlying supporting document, such as an invoice or contract. Vouching from records to source evidence mainly tests the occurrence and validity of recorded amounts, helping detect overstatement of assets, income or expenses.
• Wage Protection System (Term), An electronic UAE system that requires employers to pay registered employees through approved banks and exchange houses so that salaries can be monitored. It helps the authorities ensure workers are paid in full and on time, and non-compliance can lead to penalties or licence restrictions. It is overseen by MOHRE and the central bank. Confirm the current coverage and rules with the relevant authority.
• Wages Protection System (WPS), A UAE electronic salary transfer system that requires covered employers to pay employee wages through approved channels so that payments can be monitored for timeliness and accuracy. Administered in connection with MOHRE, it aims to protect workers and ensure salaries are paid in full and on time. Coverage and rules can differ for free zones, so confirm your obligations with the relevant authority.
• Walkthrough Test, A procedure in which the auditor traces one or a few transactions through a process from initiation to recording in the financial records. It confirms the auditor's understanding of how a control or system actually operates, helps identify where misstatements could arise, and supports the design of further tests of controls or substantive work.
• Weighted Average Cost Method, The weighted average cost method, permitted by IAS 2, values inventory and cost of sales using the average cost of items available during the period, recalculated as new purchases arrive. It smooths the effect of price fluctuations and is one of the two IFRS-allowed cost formulas alongside first-in, first-out.
• Weighted-Average Cost, An inventory costing method that values stock and cost of sales using the average cost of all units available, recalculated as new purchases arrive. Accepted under IAS 2, it smooths the effect of price fluctuations and contrasts with first-in-first-out, which charges the oldest costs to sales first.
• Withholding Tax (UAE), A tax deducted at source from certain payments. Under UAE Corporate Tax a withholding tax framework exists, but the rate on relevant domestic and cross-border payments is currently set at 0%, so no amount is generally withheld. The rate could be changed in future by decision. Confirm the current withholding tax rate and any reporting duties with the FTA.
• Withholding Tax at 0% (Corporate Tax), Under UAE Corporate Tax, a withholding tax exists in the law but the rate is currently set at 0% on certain categories of state-sourced income paid to non-residents. This means no amount is generally withheld at present, though the framework allows the rate to change in future. Reporting obligations may still apply. Confirm the current withholding position for your payments with the FTA.
• Work Permit, An authorisation that allows a foreign national to take up employment with a specific employer in the UAE. On the mainland it is issued by the Ministry of Human Resources and Emiratisation, while free zones issue their own permits. It is closely tied to the employment contract and residence visa process. Confirm the current categories and steps with the relevant authority.
• Work Permit Types, The different categories of permits issued by the UAE Ministry of Human Resources and Emiratisation that allow a person to work legally, such as standard employment, part-time, temporary, freelance and transfer permits. The type chosen affects sponsorship, duration and the activities allowed. The available categories are updated over time. Confirm which permit suits your situation with MOHRE or a qualified adviser.
• Working Capital Management, The day-to-day management of a business's short-term assets and liabilities, mainly inventory, receivables and payables, to ensure it can meet obligations while using cash efficiently. Working capital is current assets less current liabilities. Good management shortens the cash conversion cycle, easing liquidity pressure and reducing the need for external funding.
• WPS File, The salary file submitted under the UAE Wage Protection System, an electronic format containing employee and payment details that employers send through an approved agent or bank so wages are paid through monitored channels. It helps ensure staff are paid correctly and on time. Format and submission rules are set by the authorities, so confirm them with the relevant authority.
• Zero-rated Supply, A taxable supply on which VAT is charged at 0% rather than the standard 5%. In the UAE this can include certain exports, international transport, some healthcare and education, and qualifying investment-grade precious metals. Because they are taxable, businesses making zero-rated supplies can still recover related input VAT. Confirm the current list with the FTA.