Accounting books and document retention

Accounting books 

The main books of account that companies must keep in their records are as follows:

• Inventory book and balance sheet: It is used to record at least once a year the inventories of all the assets, rights and obligations of the company or the balance sheet in detail, in such a way as to present a greater description than that found in the other official or obligatory books (...) Article 52 of the Commercial Code stipulates that at the beginning of its commercial activities and at least once a year, every merchant shall prepare an inventory and a balance sheet to provide a clear and complete description of the situation of its assets.

• General ledger and balance sheet: The values per account or item of the transactions of the respective period are recorded in summary form. Starting from the balances of the previous period, the values of the debit and credit movement of the respective period (daily, weekly, biweekly or monthly) are shown and then the new balances are recorded, which will be the basis as previous balances for the following period. These items correspond to the totals recorded in the journal and the ending balance for the same month.

• Daybook: The journal book must present the following characteristics according to the technical advice of the accounting profession, Professional Guidance No. 5: "It is a book in which all the operations resulting from the economic events occurring in a period not exceeding one month are recorded day by day. The entries made in this book are a transfer of the information contained in the accounting vouchers, which in turn must be supported by the documents that justify them.”

It is also important to mention that the place where the accounting books must be exhibited is at the company's main domicile.

In relation to the accounting books, it is important to mention annex 6 of decree 2270 of 2019 as it refers to some indispensable terms for the correct management of the accounting of the companies:

• The information contained therein must be accessible for subsequent consultation.
• That the data message or document is retained in the format in which it was generated.
• The origin, date and time the document was produced can be determined.

Conservation of documents

In accordance with the provisions of Article 28 of Law 962 of 2005 and Articles 51 and 33 of the Code of Commerce, the books and vouchers that support the items recorded in the trade books, with the documents that justify them, the merchant's papers and correspondence related to the business must be kept for a term of ten years.

"Law 962 of 2005 - Article 28. Rationalization of the conservation of books and commercial papers. The books and papers of the merchant shall be kept for a period of ten (10) years counted from the date of the last entry, document or voucher, being able to use for this purpose, at the merchant's choice, their conservation in paper or in any technical, magnetic or electronic means that guarantees their exact reproduction.”

Now for tax purposes, Article. 632 of the tax statute, mentions that it is a duty to keep information and evidence for purposes of control of taxes administered by the General Directorate of National Taxes, (today UAE Directorate of National Taxes and Customs) persons or entities, taxpayers or non-taxpayers thereof, must keep for a minimum period of five (5) years*, counted from January 1 of the year following the year of its preparation, issuance or receipt, the following documents, information and evidence, which must be made available to the Tax Administration, when it so requires:

• In the case of persons or entities required to keep accounting records, the accounting books together with the internal and external vouchers that gave rise to the accounting records, in such a way that it is possible to verify the accuracy of the assets, liabilities, equity, income, costs, deductions, exempt income, discounts, taxes and withholdings recorded therein. When the accounting is kept on computer, additionally, the magnetic media containing the information, as well as the respective programs, must be kept.
• The specific information and evidence contemplated in the regulations in force, which entitle or allow to credit income, costs, deductions, discounts, exemptions and other tax benefits, active and passive credits, withholdings and other factors necessary to establish the taxpayers' net worth and liquid income, and in general, to correctly establish the taxable bases and liquidate the corresponding taxes.
• Proof of the deposit of withholdings at source made in its capacity as withholding agent.
• Copy of the tax returns filed, as well as the corresponding payment receipts.

However, it is valid to take into account that Article 46 of Law 962 of 2005 modified by Article 304 of Law 1819 of 2016 establishes that the time to keep the supports referred to in Article 632 of the ET is the same for the corresponding return to become final; In other words, the Dian can only request the accounting supports during the time in which the return becomes final, so, for example, if the return becomes final in three years (with Law 1819 of 2016, Article 714 of the ET was modified, which regulates the general term of finality of tax returns, which went from two to three years), the Dian only has that time to request the accounting books, among others.

For this reason, in conclusion, the minimum term of conservation of the documentation is 10 years, for which the information must be properly archived and preserved, intact.