Accounting for Logistics
UAE 2026

UAE freight forwarders and customs brokers run accounting around the shipment file. Every cost, every advance, and the final client invoice all tag back to that shipment number. Costs are split into two buckets (forwarder’s own costs and pass-through/billable disbursements), which are both ideally routed through the WIP and released at invoice.

Carrier costs are the forwarder’s own costs, and customs duties are pass-through (billable costs), but they are recorded using the same mechanics. Forwarder’s own costs and pass-through (billable) costs are both ideally recorded in a manner that mirrors WIP accounts. For each cost type, you must create balance sheet accounts and record matching P&L expenses at invoice time so that cost and revenue are recognized in the same period. The Skrooge app automates the WIP routing as well as journal entries for each line item. Without automation or dedicated in-house accountants, forwarders record their own costs in the profit and loss statement immediately, which leads to margin swings from month to month. Such forwarders may use Zoho Books’ billable expense feature for pass-through costs, which doesn’t affect the P&L in the long term, but often, the timing of recognition doesn’t match the timing when the benefits of these expenses are felt.

For customer advance/deposits, you should use Zoho’s Retainer Invoice module instead of the standard one. These deposits are recognized as Unearned Revenue, which shows up as a liability on the balance sheet. Under UAE timing rules, the 5% VAT is due at invoice issuance. When the final invoice for the ship is raised, the Unearned Revenue is drawn down to Revenue against the matching invoice line with no new VAT. After this, the final accounts receivable account shows only the net amount the client still owes. Booking an advance as a regular invoice posts revenue immediately, which means ignoring the deferral mechanism.

Every shipment gets a unique shipment number, which is added to all bills, retainer invoices, and the final invoice. If you use Skrooge automation, you can instantly see how much unfinished work/value (“WIP balance”) is still open for each shipment. If you do not use the automation, you calculate profit manually by comparing all costs linked to the shipment (bills) versus all customer invoices issued for that shipment. This comparison can be tracked in Zoho Books using a project profit-and-loss report. At the same time, CargoWise has its own built-in profitability dashboard from the operations side. By the end of each month, the numbers in Zoho Books and CargoWise should match for every shipment.

International transport of goods is treated as zero-rated supplies when the shipment crosses the UAE border. However, any transport of goods within the country is a standard-rated supply carrying a 5% VAT rate. Any bills from foreign carriers must be handled under the reverse charge mechanism (RCM), wherein you self-assess 5% input VAT and apply 5% output VAT. This has a net-zero impact from a cash flow standpoint, but it still must be recorded in VAT filings. Customs duty disbursement is outside the scope of UAE VAT. They are not taxable supplies when recharged at cost.

Free-zone forwarders need to check Qualifying Free Zone Person (QFZP) eligibility against the FTA’s qualifying-activities list, where logistics is typically mentioned, but the exact scope should be verified against the latest Cabinet Decision before claiming 0% corporate tax. If you do not qualify for QFZP, the standard rules apply. You must pay 9% corporate tax on taxable income over AED 375,000. However, you may elect 0% taxable income for corporate tax under the Small Business Relief (SBR) scheme if your revenue was up to AED 3 million for both the current and immediately preceding tax period. Under current legislation, the SBR scheme is valid only for tax periods ending before 31st December 2026.

Transport costing involves categorizing costs into fixed and variable costs and calculating cost units (cost per passenger-kilometer, cost per tonne-kilometer, etc.). The objective of performing transport costing is to evaluate route efficiency and to determine which orders are most likely to be profitable.

Transportation accounting includes accounting processes like freight cost management and fuel cost monitoring. Its core objective is to identify inefficiencies in the transportation function of a business.

Promotion, place, product, and price are the traditional 4Ps of logistics to which people, process, and physical evidence were added to form the new 7Ps of logistics.