Chart of Accounts for UAE Companies: Structure and Best Practices
What Is a Chart of Accounts and Why Does It Matter?
A chart of accounts (COA) is the backbone of your bookkeeping. It is an organized list of every account your business uses to record financial transactions — revenues, expenses, assets, liabilities, and equity.
Think of it as the filing cabinet for your finances. Every time money moves — you pay a supplier, send an invoice, receive a payment — the transaction is recorded against one or more accounts in the chart. If the chart is well-organized, your financial statements, VAT returns, and corporate tax filings practically prepare themselves. If it is messy, every reporting task becomes a manual exercise in forensic accounting.
Standard Structure
A typical chart of accounts follows this five-category hierarchy:
1. Assets (1000–1999)
What your company owns. This includes bank accounts (1010 — Business Bank Account AED), accounts receivable (1100), fixed assets (1500 — Office Equipment, 1510 — Computer Equipment), and prepaid expenses (1200).2. Liabilities (2000–2999)
What your company owes. Accounts payable (2000), accrued expenses (2100), VAT Payable (2200), employee gratuity provision (2300), and any loans or credit facilities.3. Equity (3000–3999)
Owner's investment and retained earnings. Share capital (3000), retained earnings (3100), and current year profit/loss (3200).4. Revenue (4000–4999)
Income from your business activities. Service revenue (4000), product sales (4100), and other income (4900). For QFZP tracking, you may want sub-accounts for qualifying revenue (4000) and non-qualifying revenue (4050).5. Expenses (5000–5999)
Costs of running the business. Office rent (5000), salaries (5100), professional services (5200), marketing (5300), travel (5400), utilities (5500), depreciation (5600), bank charges (5700).UAE-Specific Accounts You Need
Standard international charts of accounts miss several UAE-specific requirements:
- VAT Payable (2200) — tracks output VAT collected on your sales that you owe to the FTA
- VAT Receivable (1300) — tracks input VAT on your purchases that you can recover from the FTA
- Gratuity Provision (2300) — UAE labour law requires end-of-service gratuity. You should accrue this monthly, not calculate it only when an employee leaves
- Visa and License Costs (5210) — trade license renewals, visa costs, and establishment card fees are significant expenses for free zone companies
- Free Zone Service Charges (5220) — annual service charges from your free zone authority
- WPS Salary Clearing (2400) — if you use WPS for payroll, a clearing account helps reconcile salary disbursements
Structuring for Corporate Tax Compliance
With the introduction of UAE corporate tax, your chart of accounts now needs to support tax reporting as well. Key considerations:
- Separate qualifying and non-qualifying revenue if you are pursuing QFZP status. Use sub-accounts (e.g., 4000 Qualifying Revenue, 4050 Non-Qualifying Revenue) rather than tagging after the fact
- Track depreciation per asset class — corporate tax allows specific depreciation rates, so your COA should have separate depreciation expense accounts for each major asset category
- Identify non-deductible expenses — some expenses (fines, penalties, entertainment beyond limits) are not deductible for corporate tax. Tag them in a separate account (5800 — Non-Deductible Expenses) for easy identification at filing time
- Keep personal and business expenses strictly separated — this sounds obvious, but mixed accounts are the single biggest issue auditors flag in free zone companies
Setting Up Your COA in Practice
When setting up your chart of accounts, follow these principles:
- Start simple and add complexity as needed — a 30-account COA that is consistently used beats a 200-account COA with entries in the wrong places
- Use a logical numbering scheme — leave gaps between account numbers so you can insert new accounts later without renumbering
- Match your VAT categories — every expense account should map clearly to a VAT category (standard-rated input, zero-rated, exempt, out of scope). This makes VAT return preparation almost automatic
- Review quarterly — as your business grows, your COA should evolve. New revenue streams, new expense types, and new compliance requirements all mean new accounts
Maya Finance comes with a pre-configured UAE chart of accounts that includes all the accounts mentioned above. You can customize it, but most free zone companies find the default structure covers 90% of their needs from day one.
