Q4 Compliance Checklist: Year-End Requirements for UAE Businesses

The fourth quarter marks the most critical compliance period for UAE businesses. Between October and December, companies must complete numerous regulatory filings, prepare for year-end audits, finalize tax submissions, and ensure all licenses and approvals remain current. Missing Q4 deadlines can result in penalties ranging from AED 10,000 to license suspension.

October Compliance Tasks

VAT Return Submission

Deadline: October 28 (for Q3 - July to September)

Requirements:

• File VAT return through FTA portal
• Pay any VAT liability due
• Verify input tax claims have proper tax invoices
• Reconcile VAT per books to VAT per return

Common Issues: Late filing penalty AED 1,000-10,000 depending on taxable supplies value

Corporate Tax Return (if applicable)

For Companies with June 30 Year-End:

• Tax return deadline: 9 months from year-end = March 31
• Begin tax return preparation in Q4
• Gather transfer pricing documentation
• Calculate taxable income adjustments

Economic Substance Return

Deadline: 12 months from financial year-end

Licensees Conducting Relevant Activities must file ESR notification and report demonstrating:

• Core income-generating activities in UAE
• Adequate employees and expenditure
• Physical presence in UAE

Penalty for Non-Filing: AED 50,000

November Compliance Tasks

License Renewal Planning

Review Expiring Licenses:

• Trade license expiry dates
• Professional licenses (if applicable)
• Municipality approvals
• Industry-specific permits (DHA, KHDA, etc.)

Action Required: Initiate renewal process 60 days before expiry to avoid lapses

Audit Engagement for December Year-Ends

Companies with December 31 Year-End should:

• Engage or confirm audit firm by November
• Conduct pre-audit planning meeting
• Request audit document list (PBC list)
• Schedule interim audit work (if applicable)

Rationale: December year-end audits face March/April deadline pressure; early engagement ensures timely completion

Beneficial Ownership Register Update

Requirement: All UAE companies must maintain current beneficial ownership register

Q4 Action:

• Review shareholder changes during the year
• Update UBO register
• Ensure passport copies and address proof current
• Verify register available for audit and regulatory inspection

December Compliance Tasks

Year-End Physical Inventory Count

For Trading/Manufacturing/Retail Companies:

• Schedule physical inventory count at year-end
• Invite auditors to observe (mandatory for audit)
• Count all inventory locations (warehouse, branches, in-transit)
• Reconcile count to books immediately

Best Practice: Conduct count on December 31 or within 5 days; earlier counts require roll-forward procedures

Bank Confirmation Letters

Audit Requirement: Auditors send bank confirmation letters to all banks where company maintains accounts

Company Action Required:

• Notify banks to respond to auditor's request
• Provide auditor with full list of bank accounts
• Include loan facilities, guarantees, letters of credit

Timing: Banks require 2-3 weeks to respond; initiate early December

Q4 VAT Return (October-December)

Deadline: January 28, 2026

December Preparation:

• Ensure all Q4 purchases recorded
• Verify supplier tax invoices received
• Record year-end accruals
• Prepare VAT reconciliation schedule

Year-End Financial Close

Critical Closing Tasks:

Revenue Recognition: Ensure December sales properly recorded (cut-off testing)

Expense Accruals: Accrue for expenses incurred but not yet invoiced:

• Utilities (electricity, water)
• Professional fees
• Rent (if applicable)
• Employee bonuses

Depreciation: Calculate and record full-year depreciation on fixed assets

Provisions: Review and update provisions:

• Doubtful debt provision (assess collectability of receivables)
• Inventory obsolescence provision
• Warranty provisions (if applicable)
• Leave provision (employee entitlements)

Foreign Exchange Revaluation: Revalue foreign currency balances at year-end Central Bank rates

Regulatory Filing Checklist

Ministry of Economy Filings

Trade License Companies must ensure:

• Annual return filed (if required)
• Share capital changes notified
• Director changes reported
• Office address updates submitted

Free Zone Authority Compliance

DMCC/JAFZA/DAFZA Companies:

• Annual license renewal application submitted
• Lease agreement renewed/extended
• Activities still aligned with license
• Free zone compliance declarations signed

Industry-Specific Regulators

RERA (Real Estate):

• Service charge accounts audited
• Escrow account compliance confirmed
• RERA permit renewals initiated

DHA/DOH (Healthcare):

• Facility license renewal
• Professional license renewals for practitioners
• Compliance with insurance billing requirements

KHDA (Education):

• School license renewal
• Staff credentials verification
• Fee increase approvals (if applicable)

Common Q4 Compliance Pitfalls

1. Late Audit Engagement: Companies contact auditors in January expecting February completion; unrealistic for December year-ends

2. Missing Documents: Waiting until audit starts to gather documents; should prepare during Q4

3. License Lapse: Forgetting to renew licenses leads to business interruption and penalties

4. ESR Non-Filing: Companies unaware of ESR obligations miss deadline incurring AED 50,000 penalty

5. Bank Confirmations Delayed: Not notifying banks promptly delays audit completion

Q4 Compliance Action Plan

Week 1 (October 1-7)

• Submit Q3 VAT return
• Review license expiry dates
• Engage audit firm (December year-ends)

Week 2-4 (October 8-31)

• Begin ESR report preparation (if due Q4)
• Update beneficial ownership register
• Review Q3 financial results

Week 5-8 (November)

• Initiate license renewals (expiring Q1 2026)
• Conduct audit planning meeting
• Prepare audit document list
• Review and update accounting policies

Week 9-12 (December)

• Conduct year-end physical inventory count
• Send bank confirmation letters
• Complete year-end close procedures
• Record all accruals and provisions
• Prepare preliminary financial statements

Week 13 (Early January)

• Submit Q4 VAT return (by January 28)
• Provide audit documents to auditors
• Begin audit fieldwork

Conclusion

Q4 compliance requires proactive planning and systematic execution. Companies that use October-December to prepare for year-end requirements complete audits faster, avoid penalties, and start the new year with clean compliance records. The key is treating compliance as an ongoing process, not a year-end scramble.

As Ministry-approved auditors, Farahat & Co assists UAE businesses with comprehensive Q4 compliance services including audit preparation, regulatory filing support, VAT compliance, and year-end financial close advisory. Our systematic approach ensures all Q4 requirements are completed accurately and on time.