VAT Update: Use of exchange rates on Tax Invoices
17 July 2018
The UAE VAT law states that every taxable person issuing invoices in foreign currency values should convert to UAE dirhams using the exchange rates published on the Central Bank website. FTA issued a clarification regarding use of such exchange rates.
FTA has clarified that since UAE Central Bank began publishing exchange rates on 17 May 2018, all foreign currency tax invoices raised from 1 January 2018 up until 16 May 2018 should have been converted to UAE dirhams using a reliable source for exchange rates. There is no requirement to re-work tax invoices issued prior to 17 May 2018.
FTA also provided clarification on the following:
- Every taxable person would be required to use the exchange rate published by the Central Bank including the same decimal places as published.
- If a tax invoice has been issued post 17 May 2018, where the date of supply occurred prior to 17 May 2018, the taxable person would be required to use historical exchange rates as published by the Central Bank on such invoices.
- The UAE Central Bank publishes exchange rates at 6 pm every day. Accordingly, all invoices issued prior to 6 pm can carry the exchange rate published by the Central at the time the tax invoices is raised i.e. the rate for day before. All invoices raised post 6pm should carry updated exchange rate published by the Central Bank.
- A taxable person should use Central Bank rates as on the date of supply for recording VAT on import of services. It is acceptable to use the date of the invoice as the date of supply of the imported service and use the exchange rate applying as per that date.
- A taxable person shall be required to record VAT on import of goods on the exchange rate used by the Customs department at the time of import.
To access FTA guide click https://www.tax.gov.ae/pdf/use-of-exchange-rates.pdf