Foreign-currency invoices: which rate for UAE VAT?

The short answer

You may invoice in any currency, but the VAT is fixed in dirhams. Article 69 of the VAT Decree-Law converts foreign-currency amounts at the exchange rate approved by the UAE Central Bank on the date of supply. The tax invoice must show the line amounts, the gross amount and the VAT in AED, together with the exchange rate used (Article 59(1)(h), (j) and (k) of the Executive Regulation).

The FTA's public clarification VATP004 adds two practical rules: use the Central Bank's published rate with all its decimal places, and do not round it.

Which date, which rate

• The date of supply, not the payment date. Under Article 25 of the Decree-Law it is usually the earliest of delivery or completion of the service, receipt of payment, and issue of the tax invoice.
• The Central Bank publishes its rates each business day at about 6 pm. VATP004 tells taxpayers to use the rate published on the Central Bank's website when the invoice is raised.
• Use the full rate as published, for example 3.6725 for the US dollar. Shortening it to 3.67 changes the VAT and is not permitted.
• Imported services under the reverse charge: use the Central Bank rate for the date of supply. VATP004 accepts the overseas supplier's invoice date as that date.
• Imported goods: Customs converts the value on the import declaration and pre-fills Box 6. If its rate differs from the Central Bank's, you may declare at the Customs rate without an adjustment.

The AED figures the invoice must show

A USD invoice that shows only USD figures fails Article 59 even if the arithmetic is right, and the customer cannot use it to recover the VAT.

• For each line: unit price, quantity, VAT rate and the amount payable in AED
• The gross amount payable in AED
• The VAT charged in AED, with the exchange rate applied
• On a simplified invoice: the total consideration and the VAT in AED

Worked example: a euro invoice and the exchange difference

A Dubai consultancy invoices a registered UAE client EUR 8,000 plus 5% VAT of EUR 400, total EUR 8,400. The work is completed and invoiced on 14 September. Assume for illustration that the Central Bank rate for that date is 4.2850 AED per euro.

Net in AED: 8,000 × 4.2850 = AED 34,280.00. VAT in AED: 400 × 4.2850 = AED 1,714.00, which is also 5% of AED 34,280.00. Gross: 8,400 × 4.2850 = AED 35,994.00. The invoice shows all three AED figures and the rate 4.2850. The consultancy declares AED 34,280.00 in Box 1 and AED 1,714.00 of output tax.

The client pays EUR 8,400 on 14 October, when the euro is worth 4.3100. The consultancy receives AED 36,204.00 (8,400 × 4.3100), which is AED 210.00 more than it booked. That AED 210.00 is an exchange gain in the accounts. It does not change the VAT: the output tax stays AED 1,714.00, because VAT was fixed at the date of supply.

Credit notes and the books

Article 60 requires a tax credit note to show the VAT on the difference in AED, but it does not name a rate. The common approach is to reverse at the original invoice's rate, so the AED VAT on the credit note mirrors the AED VAT originally charged.

Your accounts may use a different rate source under IAS 21. That is allowed, but the VAT return must follow the Central Bank rate, so expect a small reconciling difference between the VAT-reported revenue and the ledger. Explain it once a quarter rather than at the audit.

How Hysaab applies this

Hysaab converts foreign-currency invoices to AED at a rate it records with its source and date, keeps the dirham's 3.6725 peg exact rather than rounded, and flags any foreign-currency tax invoice that does not show both the AED tax amount and the exchange rate. The free foreign-currency VAT converter shows the same working for a single invoice.

Questions people actually ask

Keep reading

• Tool: Foreign-currency invoice VAT converter (AED)
• Guide: What makes a valid UAE tax invoice — the Article 59 checklist
• Guide: The reverse charge in UAE VAT: when you are your own supplier
• Guide: Simplified vs full tax invoice: the AED 10,000 rule
• Guide: VAT on Google Ads, AWS, Microsoft 365 and every SaaS subscription in the UAE
• Guide: Reconciling VAT returns with Corporate Tax revenue