Import and export businesses in the UAE live on thin margins and fast cash cycles, so the bookkeeping that matters is not general ledger tidiness — it is four specific things: separating landed cost from selling price, handling VAT correctly at the 0% and 5% boundary, tracking multi-currency receivables, and keeping the customs and shipping evidence that lets you keep the 0% rate on exports. Get those four wrong and the result is overstated margins, FTA penalties, or both. This guide explains what correct books look like for a UAE trading business in 2026 and cites the rule behind each requirement.
Why trading businesses need different books
A trader buys goods, pays freight, duties and VAT on them, and sells them — sometimes at 0% VAT, sometimes at 5%. Every stage moves numbers between accounts that have different tax consequences. Bookkeeping that treats a shipment as one expense hides the landed cost, misstates the margin, and strips out the evidence the Federal Tax Authority (FTA) expects an exporter to keep.
Landed cost: the number most traders get wrong
The cost of goods sold for an imported product is not the supplier's invoice. It is the landed cost:
- Purchase price of the goods.
- Customs duties and any excise at the border.
- Freight, insurance and handling to the warehouse.
- Customs clearance and brokerage fees.
If your books book the supplier invoice as COGS and park freight in general expenses, your product margins are wrong and your pricing decisions are guesses. Book landed cost per shipment and allocate it to inventory properly — this is also what makes VAT recovery on imported goods traceable, since import VAT is supported by the customs declaration.
VAT in a trading business: where money is won or lost
| Transaction | VAT treatment | What your books must show | Source |
|---|---|---|---|
| Goods imported into the UAE | VAT paid at customs (or reversed-charge accounting where applicable) | Customs declaration, import VAT amount | Federal Decree-Law No. 8 of 2017 |
| Goods sold inside the UAE | 5% standard rate | Tax invoices per sale | Federal Decree-Law No. 8 of 2017 |
| Goods exported outside the UAE | 0% zero rate — conditional | Export evidence retained: customs declaration plus commercial evidence, goods leaving within 90 days of supply | Article 30, Cabinet Decision No. 52 of 2017 |
| Services supplied from the UAE to foreign customers | 0% in defined cases | Recipient's residence evidence and contract terms | Article 31, Cabinet Decision No. 52 of 2017 |
| Goods moved to a GCC Implementing State | Often reverse charge | Destination-state documentation | Cabinet Decision No. 52 of 2017 |
The 90-day export rule is the one that bites. Under Article 30 of the VAT Executive Regulation, a direct export is zero-rated only if the goods physically leave the Implementing States within 90 days of the supply date and the exporter retains official and commercial evidence of the export. Miss the window and the supply becomes standard-rated — your return must be corrected and VAT paid that you had already treated as zero. Bookkeeping that links every zero-rated sale to its shipment documents is what protects the margin you budgeted.
Multi-currency books and receivables
Trading businesses typically buy in USD, CNY or EUR and sell in AED. The books need:
- A consistent functional currency policy applied to every transaction.
- Exchange rates applied at transaction date, with realised gains and losses booked when settlement occurs.
- Aging by customer and currency — a receivable that ages 90+ days in a weak currency erodes margin twice.
Record keeping: the evidence rules
| Record | Minimum retention | Source |
|---|---|---|
| Accounting records and invoices | 5 years from the end of the tax period (VAT); 7 years for corporate tax purposes | Federal Decree-Law No. 8 of 2017; Federal Decree-Law No. 47 of 2022 |
| Customs declarations for imports and exports | With the VAT records for the relevant period | Cabinet Decision No. 52 of 2017 |
| Shipping certificates, bills of lading, commercial invoices | With the export file for each zero-rated sale | Cabinet Decision No. 52 of 2017 |
Penalties for falling short are not trivial: failing to keep required records carries an AED 10,000 penalty for the first violation and AED 20,000 on repetition under Cabinet Decision No. 49 of 2021.
A monthly close checklist for import/export traders
| Step | Why it matters |
|---|---|
| Reconcile customs declarations to import VAT in the books | Every dirham of import VAT is recoverable only if recorded and evidenced |
| Match each zero-rated sale to its export documents | Protects the 0% rate; flags shipments at risk of the 90-day rule |
| Update landed cost and inventory valuation | Correct COGS, correct margin, correct pricing |
| Revalue open foreign-currency balances | Real cash exposure, not an accounting nicety |
| Age receivables by customer and currency | Collection priority before margin erodes |
| Reconcile VAT return to the general ledger | Prevents incorrect-return penalties (AED 1,000 first time; 2,000 on repetition within 24 months) |
Frequently asked questions
Do I charge VAT when I export goods from the UAE?
No — direct exports are zero-rated, provided the goods leave the Implementing States within 90 days of the supply date and you retain the customs declaration and commercial evidence of export. If the conditions are not met, the supply is standard-rated at 5%.
Can I recover the VAT I paid on imported goods?
Yes. Import VAT shown on a customs declaration is recoverable as input tax where the goods are used for making taxable supplies — including zero-rated exports.
What is landed cost and why does it matter for pricing?
Landed cost is the full cost of getting goods to your warehouse: purchase price plus duties, freight, insurance and clearance. Pricing on the supplier invoice alone understates your true cost and overstates your margin.
Finanshels runs the books for UAE trading businesses — landed cost, VAT and evidence included. Talk to our bookkeeping team before your next VAT period closes.
