Accounting for Transfers Between Owners and UAE Companies

Funding your UAE company, paying yourself and recovering business expenses can look similar on a bank statement. They have different implications for the books, corporate tax and the documents you need.

Why these transfers matter for a UAE company

When a UAE company is getting started, the founder may pay costs personally, top up the business account and later receive money back. To the founder, this is part of keeping the business running. The accountant needs to distinguish a loan, remuneration and a profit distribution: they require different treatment in the books and under UAE corporate tax rules.

The distinction is practical. A dividend or profit distribution paid to an owner is not deductible for UAE corporate tax. Remuneration for an owner’s work is a different category: where the connected-person rules apply, deductibility is limited by market value and the requirement that the payment be wholly and exclusively for the business, alongside the other applicable conditions.

Transactions between related parties also need to meet the arm’s-length standard when determining taxable income. That does not mean every transfer creates a tax bill. It means the accountant needs to know what the transfer represents before deciding how to treat it.

Example: a founder puts AED 100,000 into the company

Imagine a consultancy waiting for a customer payment. The founder provides AED 100,000 so the company can pay its team, with an agreement that the money will be repaid when the customer pays. This is an illustrative example, not a client case or a regulatory threshold.

The arrangement needs to be documented as the funding it actually is. For a loan, that means recording the parties, amount, date, repayment terms and relevant approval. The accountant should distinguish the loan principal from any interest. The terms, including whether interest is appropriate, may need a related-party assessment.

If the founder instead intends to contribute capital, the corporate approvals and formalities need to reflect that decision. A capital contribution does not become a repayable loan simply because the founder later needs the cash. It is much easier to resolve the intended basis before the first transfer than after several repayments have been made.

Paying yourself for work is not the same as distributing profit

Now consider an owner who manages the business full-time and receives a regular monthly payment. The useful starting point is the role: what work is performed, how remuneration is agreed and what supports the amount.

For a company subject to the connected-person rules, a payroll entry alone does not establish that the full amount is deductible. The payment needs to be assessed against the market value of the work and its business purpose. Calling a withdrawal “salary” does not create those facts.

A profit distribution follows a different route and needs the relevant corporate basis and approvals. The books should show that difference. A lower bank balance does not, by itself, mean a lower taxable profit.

An expense paid personally still needs a business explanation

A founder may pay for the company’s software subscription using a personal card. That can be a genuine company expense, but the accountant still needs the invoice, the business purpose, evidence of payment and confirmation of whether the founder has already been reimbursed.

The objective is not to make everyday spending difficult. It is to avoid recording the same expense twice, reimbursing it twice or losing the connection between the payment and the company’s activity.

The reverse also matters. A personal purchase does not become a business expense because the company card was used. Mixed personal and business spending requires an appropriate assessment and allocation, not automatic treatment of the whole amount as a deductible cost.

A simple record can prevent a long reconstruction later

One useful tool is an owner–company transaction register: a running record that connects each transfer to its purpose, supporting document and any balance still owed. Loan funding, repayments, expenses paid personally and distributions should remain distinguishable rather than being grouped into an unexplained total.

Agree with your accountant how that record will be maintained and reconciled to the bank and accounting records. The accountant can then follow the history of a transfer without having to reconstruct it from messages months later.

If past entries are unclear, start with the actual agreements, invoices and bank movements. Reconstruct the facts and decide what correction is appropriate. Do not invent an agreement or backdate paperwork to make the history appear cleaner.

Discuss the arrangement before the next transfer

The most useful conversation is often short: what is the money for, is repayment expected, and what does the company need to record? The answer may be straightforward, but it should be the same answer for the owner, the accountant and anyone later reviewing the records.

That is especially valuable when a UAE company is newly established and the founder is covering costs personally. Clear arrangements from the beginning give the business a more reliable basis for both day-to-day decisions and corporate tax reporting.

If you are funding your UAE company or receiving payments from it, tell Garant what transfers are taking place. Contact us through the link below to discuss the accounting support and documentation your situation needs.

Contact Garant: https://garant.ae/en/contact-us

Related service: https://garant.ae/en/accounting-services/bookkeeping

General information, not advice on a particular transaction. Legal form, applicable exceptions, corporate documents and the facts of the payment need to be considered.

Legal reference: UAE Corporate Tax Law, Articles 28, 33, 34 and 36: https://mof.gov.ae/wp-content/uploads/2026/01/Federal-Decree-Law-No.-47-of-2022-and-its-amendments-en-v13.1.26.pdf