A UAE chart of accounts needs: assets (current + fixed), liabilities (including VAT payable and GPSSA payable), equity, revenue (split by VAT treatment: standard, zero-rated, exempt), and expenses (with blocked input VAT categories clearly separated). Standard numeric coding: 1xxx assets, 2xxx liabilities, 3xxx equity, 4xxx revenue, 5xxx cost of sales, 6xxx operating expenses.
Standard UAE chart of accounts structure
| Range | Category | Key UAE-specific accounts |
|---|---|---|
| 1000–1099 | Cash and bank | Cash on hand, UAE bank accounts (one per bank), petty cash |
| 1100–1299 | Accounts receivable | Trade debtors, VAT recoverable, prepayments |
| 1300–1499 | Inventory | Trading stock, raw materials, WIP |
| 1500–1799 | Fixed assets | Computers, vehicles, furniture, leasehold improvements |
| 1800–1899 | Accumulated depreciation | Contra accounts per asset class |
| 2000–2099 | Accounts payable | Trade creditors, accrued expenses |
| 2100–2199 | VAT accounts | Output VAT payable, input VAT recoverable |
| 2200–2299 | Payroll liabilities | Salaries payable, GPSSA payable, WPS clearing |
| 2300–2499 | Loans and finance | Bank loans, director loans, lease liabilities |
| 3000–3999 | Equity | Share capital, retained earnings, owner drawings |
| 4000–4499 | Revenue | Consultancy, product sales, rental income (split by VAT type) |
| 4500–4699 | Zero-rated revenue | Export sales, international services |
| 4700–4899 | Exempt revenue | Bare land rentals, certain financial services |
| 5000–5999 | Cost of sales | Direct costs attributable to revenue |
| 6000–6499 | Staff costs | Salaries, GPSSA contributions, gratuity provision, leave accrual |
| 6500–6699 | Office expenses | Rent, utilities, communications |
| 6700–6899 | Professional fees | Audit, legal, accounting (input VAT reclaimable) |
| 6900–6999 | Blocked expenses | Entertainment, personal vehicle — input VAT not reclaimable |
VAT-specific account setup
Two VAT accounts are essential in any UAE chart of accounts:
- Output VAT payable (e.g., 2100): Credited every time you issue a tax invoice. Balance = total VAT collected from customers in the period. This is a liability — you owe this to the FTA.
- Input VAT recoverable (e.g., 2110): Debited every time you receive a tax invoice from a supplier and the expense is VAT-reclaimable. Balance = total input VAT claimable. This offsets output VAT.
- VAT clearing / suspense (optional, e.g., 2120): Used to hold VAT during the period before filing. Some businesses use a single net VAT account; others prefer to split input and output for easier reconciliation.
Create distinct expense account codes for entertainment and personal vehicle costs (e.g., 6900–6999). When input VAT is posted to these accounts, mark it as non-reclaimable. This makes the blocked input VAT visible at return time and prevents accidental inclusion in your input tax claim.
Payroll-specific accounts for UAE
- Salaries expense (6000): Gross salary for all employees — the WPS-processed amount.
- GPSSA employer contribution expense (6010): 12.5% employer contribution for UAE/GCC nationals (charged to P&L).
- GPSSA payable (2210): GPSSA due but not yet remitted (liability until paid by 15th of following month).
- Gratuity provision (2220): Monthly accrual for end-of-service gratuity for all employees. Debit: gratuity expense; Credit: gratuity provision liability.
- Leave accrual (2230): Monthly accrual for annual leave earned but not yet taken.
- WPS clearing account (2240): Used when payroll is processed — debit salaries payable, credit WPS clearing; when bank debits, debit WPS clearing, credit bank.
Sample VAT postings against the UAE chart of accounts
The point of a UAE-ready chart of accounts is that every transaction lands in the right code automatically. Here is how the common VAT transactions post:
| Transaction | Debit account | Credit account |
|---|---|---|
| Sale with 5% VAT | Accounts receivable (1100) | Revenue (4000) + Output VAT payable (2100) |
| Purchase with reclaimable VAT | Expense (6xxx) + Input VAT recoverable (2110) | Accounts payable (2000) |
| Zero-rated export sale | Accounts receivable (1100) | Zero-rated revenue (4500) |
| Blocked expense (entertainment) | Blocked expense (6900) incl. VAT | Accounts payable (2000) |
| VAT settled to FTA | Output VAT payable (2100) | Input VAT recoverable (2110) + Bank (1000) |
The fastest UAE VAT returns come from a chart of accounts that already mirrors the VAT 201 form. Tag each revenue code as standard, zero-rated or exempt, and isolate blocked input VAT (entertainment, personal-use vehicles) in its own 6900–6999 range so it never leaks into your recoverable input tax. Then a single trial balance feeds the return.
Mapping the chart of accounts to the VAT 201 return
When the COA mirrors the return, filing is a reconciliation rather than a re-build. This is how the account ranges feed the VAT 201 boxes:
| VAT 201 box | Sourced from COA | What to reconcile |
|---|---|---|
| Standard-rated supplies (Box 1) | Revenue 4000–4499 | Net sales at 5% = output VAT ÷ 5% |
| Zero-rated supplies (Box 4) | Zero-rated revenue 4500–4699 | Exports & international services |
| Exempt supplies (Box 5) | Exempt revenue 4700–4899 | Bare land, certain financial services |
| Recoverable input tax (Box 9) | Input VAT recoverable 2110 | Exclude blocked input VAT in 6900–6999 |
The same structure feeds your corporate tax computation and keeps you ahead of every filing on the UAE tax calendar.
What UAE businesses actually ask about the chart of accounts
The recurring questions from UAE founders and bookkeepers setting up their accounts — answered.
How should a UAE chart of accounts handle VAT?
Keep at least two VAT accounts — Output VAT payable (e.g. 2100) and Input VAT recoverable (e.g. 2110) — and split revenue codes by VAT treatment (standard, zero-rated, exempt). That way the trial balance maps straight onto the VAT 201 return with no manual re-sorting.
What account codes do UAE businesses use for blocked VAT?
Put non-reclaimable costs — entertainment and personal-use vehicles — in a dedicated 6900–6999 range and post the VAT inclusive (or flag it non-recoverable). This keeps blocked input VAT visible at return time and stops it being accidentally claimed, which is a common cause of incorrect-return penalties.
How do you record gratuity and end-of-service in the chart of accounts?
Accrue it monthly: debit a gratuity expense (in staff costs, e.g. 6020) and credit a Gratuity provision liability (e.g. 2220). The provision builds to roughly 21 days’ basic salary per year for the first five years and 30 days thereafter, so the liability on the balance sheet always reflects the real end-of-service exposure.
Should I use a UAE-specific chart of accounts or a generic template?
Start from a generic structure but add the UAE-specific accounts a generic template misses: separate VAT accounts, zero-rated and exempt revenue lines, GPSSA payable, WPS clearing, gratuity and leave provisions, and a blocked-expenses range. A plain off-the-shelf COA will not produce a clean VAT 201 or support corporate tax.
How should a UAE group set up accounts for intercompany transactions?
Give related-party balances their own codes — intercompany loans, management-fee income/expense and recharges — so they are easy to isolate and eliminate on consolidation, and easy to disclose for corporate tax. See our UAE intercompany accounting guide.
Need your UAE chart of accounts set up correctly from day one?
We configure your accounting software with a UAE-compliant chart of accounts including VAT codes, payroll accounts, and asset classes. One-off setup, then monthly bookkeeping.
Frequently asked questions
What is a chart of accounts and why do UAE businesses need one?
A chart of accounts is the structured list of all accounts used in a business’s general ledger. UAE businesses need one because Corporate Tax and VAT returns require financial statements prepared from properly organised accounting records — and auditors require a coherent account structure when reviewing financial statements.
How should UAE businesses split revenue in the chart of accounts?
Revenue should be split by VAT treatment: standard-rated (5%), zero-rated (0% — exports, international services), and exempt (no VAT). This split makes the VAT return straightforward — each revenue type feeds directly into the relevant box in the EmaraTax return.
Should UAE businesses use a UAE-specific chart of accounts template?
Most UAE accounting software (Zoho Books, QuickBooks UAE, Xero) includes UAE-localised chart of accounts templates with VAT codes pre-mapped. These are a good starting point, but businesses with GPSSA obligations or significant fixed assets may need to customise the payroll and asset sections.
How do you account for gratuity in UAE bookkeeping?
Monthly accrual: debit gratuity expense (P&L), credit gratuity provision (balance sheet liability). The amount is calculated as 1/12 of the annual entitlement (21 days basic salary per year for years 1–5). When an employee leaves and is paid gratuity, debit the provision and credit bank.
What accounting codes do UAE businesses use for VAT?
Common practice: Output VAT payable in the 2100 range (liability), Input VAT recoverable in the 2110 range (receivable offset). Some businesses use a net VAT account; others split input and output. The key is that each VAT return box maps to a specific account or combination of accounts for easy reconciliation.
How do I map my UAE chart of accounts to the VAT 201 return?
Tag each revenue code by VAT treatment (standard, zero-rated, exempt) and keep Output VAT payable and Input VAT recoverable in dedicated liability accounts. Box 1 comes from your standard-rated revenue, Box 4 from zero-rated revenue, Box 5 from exempt revenue, and recoverable input tax (Box 9) from Input VAT recoverable minus any blocked input VAT. A trial balance then feeds the return directly.
Which expenses are blocked input VAT in the UAE and how do I code them?
Entertainment and personal-use motor vehicles are the main blocked categories — their input VAT is not recoverable. Code them in a dedicated 6900–6999 range and post or flag the VAT as non-recoverable so it never enters your input tax claim and trigger an incorrect-return penalty (AED 500 first, AED 2,000 repeat).
How many digits should a UAE chart of accounts use?
A four-digit code (e.g. 1000–6999) is the practical standard for UAE SMEs — enough to separate cash, receivables, VAT, payroll liabilities, equity, revenue by VAT type and expenses, without becoming unwieldy. Larger groups extend to five or six digits for departmental or entity sub-ledgers.
Do UAE free zone companies need a different chart of accounts?
The structure is the same, but a Qualifying Free Zone Person should add codes that separate qualifying from non-qualifying income and track the de minimis test (non-qualifying income up to AED 5 million or 5% of revenue). This makes the corporate tax position auditable directly from the ledger.
How do I account for the VAT settlement payment to the FTA?
At return time, clear Output VAT payable against Input VAT recoverable; the net is what you owe. Debit Output VAT payable, credit Input VAT recoverable and credit Bank for the balance paid to the FTA. If input exceeds output you have a refund/credit position rather than a payment.