Accounting built around subscriptions, deferred revenue and cross-border VAT
Annual contracts billed upfront, cloud bills from suppliers who charge you no VAT, and development spend that may or may not be an asset — each recognised in the right period and declared in the right box.
- Revenue recognised over the term
- Reverse charge handled
500+ Businesses
Supported across the UAE
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Product and services alike
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Both structures handled
Dedicated Advisor
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Three things that break a software company’s books
Not general accounting with a product bolted on. These are the places technology businesses actually misstate results and fail reviews.
Cash that is not revenue yet
An annual contract invoiced in January is one month of cash and twelve months of service. Book it when it lands and January looks extraordinary, December looks broken, and in between sits a liability nobody recorded.
VAT nobody charged you
Your cloud, your pipelines, your design and analytics subscriptions come from suppliers with no UAE establishment, so no UAE VAT appears on the invoice. You still have to account for it — and a return that leaves it out is wrong even though nothing was owed on balance.
Build cost with two possible homes
Research is an expense the moment it happens. Development can become an asset, but only once every recognition criterion is met and the judgement is written down. Treat all of it one way and either your profit or your balance sheet is wrong.
Cash in month one. Revenue over twelve.
A single AED 120,000 annual contract, invoiced and paid in January. Every bar below is drawn on the same scale.
Swipe the chart to see the rest of the year
- Cash received — AED 120,000, once
- Revenue earned — AED 10,000 a month
- Deferred revenue — unwinding to nil
The bank says January was a record month. The accounts say January earned AED 10,000 and left you owing eleven months of service. Both are true — but only one of them is a result, and only one of them is what a buyer, a lender or an auditor will read.
A worked example on one AED 120,000 annual contract, not a quote. Under IFRS 15 a subscription is transferred across its term, so the revenue follows the service and not the invoice.
“Software companies rarely get the tax wrong. They get the period wrong — and a year of that is very hard to unpick.”
Ripple Accounting · DubaiThe VAT nobody charges you on the tools you run on
An overseas supplier bills you AED 100,000 for cloud and software in a quarter, with no UAE VAT on the invoice. Here is what still has to happen in your return.
Output tax, self-accounted under the reverse charge because the place of supply is the UAE.
Input tax on the same return, to the extent the cost relates to your taxable supplies.
Which is exactly why it gets skipped — and exactly why skipping it is a problem.
Nothing is owed on balance, but a return that leaves both entries out is an inaccurate return, and the recovery side is only available to the extent the cost supports taxable supplies — so for a business with any exempt activity the two do not cancel at all. One change worth knowing: since 1 January 2026 you no longer issue a self-invoice for this. Keep the supplier’s invoice and the import documentation instead.
The whole cycle, from the signed contract to the filed return
Revenue and deferred revenue
A schedule per contract that releases revenue across its term and carries the balance as a liability — so a month reflects the service you actually delivered in it.
Reverse charge on imported services
Every overseas cloud, tooling and licence bill picked up, declared on both sides of the return, and supported by the documentation the law now asks you to keep.
Development cost, expensed or capitalised
A written test applied the same way each period, so what goes to the balance sheet can be defended — and what cannot is taken through the P&L when it happens.
Cross-border invoicing
Where each supply is treated as taking place, in writing, before it is invoiced — because on services the customer’s country is not automatically the answer.
Payroll and contractors
Salaries, end-of-service and overseas contractor payments handled properly, with the distinction between an employee and a supplier made deliberately rather than by habit.
VAT and Corporate Tax
Returns filed inside the 28-day window, and Corporate Tax at 9% above AED 375,000 — and for a free zone company, a clear-eyed look at whether the income actually qualifies for the 0% rate, which turns on the activity and not the address.
Four steps, then it runs
Contract review
We read what you actually sell — terms, billing cycles, renewals — and how each of them is being recognised today.
Set the policy
One written basis for revenue recognition, development cost and imported services, so nobody re-decides it at every close.
Monthly close
Deferred revenue released, overseas bills picked up on both sides, development spend tested, with the contracts filed against the entries.
Returns and reporting
VAT filed inside the 28-day window, and a monthly view of recognised revenue, deferred balance and burn you can plan from.
Common questions from UAE technology companies
We bill annually, upfront. When is that revenue?+
Across the term you are serving, not on the day you invoice. Under IFRS 15 a subscription is transferred over the period it covers, so an AED 120,000 annual contract is AED 10,000 a month. The cash you hold ahead of that service is a contract liability — deferred revenue — and it belongs on the balance sheet until you have earned it. This is the single most common restatement we see in software.
Our cloud bills come from abroad with no VAT on them. Can we just ignore them?+
No. Under Article 48 you account for the VAT yourself under the reverse charge: 5% declared as output tax and recovered as input tax on the same return, to the extent the cost relates to your taxable supplies. The net cash effect is usually nil, which is exactly why it gets skipped — but a return that omits both entries is an inaccurate return. Since 1 January 2026 you no longer issue a self-invoice for it; keep the supplier’s invoice and the import documentation.
Can we capitalise what we spend building our own product?+
Some of it, sometimes. Under IAS 38 research is expensed as it happens. Development can be capitalised, but only once every recognition criterion is met — technical feasibility, the intention and ability to complete and use or sell it, probable future economic benefits, adequate resources, and the ability to measure the spend reliably. The test has to be applied and documented, not assumed; “we are building a product” is not the same as meeting it.
We sell to customers outside the UAE. Do we charge VAT?+
It depends on where the supply is treated as taking place, and the customer’s country is not automatically the answer. An export of services can be zero-rated where the conditions in the law are met, and electronic services carry their own place-of-supply rule tied to where the service is used and enjoyed. This is the question technology clients ask us most, and the one most worth having a written position on before the invoices go out rather than after.
We are in a free zone. Does that mean 0% Corporate Tax?+
Not by itself. The 0% rate applies to a qualifying free zone person’s qualifying income, and whether income qualifies turns on the activity, the conditions and the substance behind it — not on the address on the licence. It is a question worth answering deliberately and in writing, because the consequence of getting it wrong is retrospective and applies to the whole period, not just the part you got wrong.
Talk to someone who has seen your books before
Thirty minutes, a look at how your contracts, deferred revenue and overseas bills are recorded, and an honest view of what is missing.
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