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Your business raises an invoice in US dollars at 11am. You open the Central Bank of the UAE website to convert the VAT amount into dirhams, and the rate showing is yesterday's. Today's rate will not appear until the evening. So which rate goes on the tax invoice?
Yes, using the previous day's published CBUAE rate is compliant, but only in one specific situation. The Federal Tax Authority confirmed in Public Clarification VATP004 that where a tax invoice is issued before the Central Bank publishes that day's rate (rates are published daily from 6pm onwards), it is acceptable to use the rate showing on the Central Bank website at the time the invoice is raised, which will be the previous day's rate.
Outside that situation, the previous day's rate is generally the wrong rate, and using it can understate or overstate your VAT.
The rest of this article explains where the rule comes from, exactly when it applies, and the mistakes that get businesses into trouble with it.
Why the question exists at all
Two legal requirements collide here.
First, Article 69 of Federal Decree-Law No. 8 of 2017 on Value Added Tax requires that where a supply is made in a currency other than the UAE dirham, the amount on the tax invoice must be converted into dirhams using the exchange rate approved by the UAE Central Bank at the date of supply.
Second, the Central Bank only publishes each day's approved rates in the evening. The CBUAE began publishing daily exchange rates on 17 May 2018, and the rates covering a given day appear on its website from around 6pm onwards.
That creates an obvious gap. A tax invoice issued at 11am on Wednesday needs Wednesday's rate, but Wednesday's rate does not exist yet. The FTA resolved this in Public Clarification VATP004 (Use of Exchange Rates for VAT purposes): an invoice raised before the daily rate is published may use the rate available on the Central Bank website at that moment, meaning the previous day's rate.
There is a third requirement worth knowing before you rely on any of this. Under Article 59 of Cabinet Decision No. 52 of 2017 (the Executive Regulation of the VAT Decree-Law, as amended by Cabinet Decision No. 100 of 2024), a tax invoice issued in a foreign currency must show the tax amount payable in dirhams together with the exchange rate applied. The rate you choose is not an internal bookkeeping detail. It appears on the face of the invoice and your customer relies on it to recover input tax.
How the CBUAE publication cycle works in practice
Think of each business day in two halves.
Before roughly 6pm: today's rate has not been published. An invoice raised now may lawfully use the most recent rate on the CBUAE website, which is the previous day's rate. This is the situation VATP004 blesses.
From roughly 6pm onwards: today's rate is live. An invoice raised now should use today's rate. Reaching back to yesterday's rate at this point is not supported by the clarification, because the rate for the day is available.
Today's rate not yet published. Use the previous day's published rate.
CBUAE publishes today's rates on its website.
Today's rate is live. Use today's rate.
A simple example. Suppose your company issues a EUR 10,000 tax invoice on Wednesday at 11:30am, for a supply made the same day. Wednesday's rate is not yet published, so you use Tuesday's published EUR rate. If that rate is 4.286100 (an illustrative figure, not an actual CBUAE rate), the invoice values are:
| Consideration | EUR 10,000.00 |
|---|---|
| CBUAE rate applied (Tuesday's published rate) | 4.286100 |
| Value in AED | AED 42,861.00 |
| VAT at 5% | AED 2,143.05 |
Both the AED tax amount and the rate of 4.286100 must appear on the invoice. You can test the numbers for your own invoices with the Stevva VAT calculator.
The rule people miss: the date of supply still anchors the rate
VATP004's previous-day allowance solves a same-day timing problem. It is not a general licence to pick whichever recent rate is convenient, and it does not override Article 69's anchor to the date of supply.
Article 67 of the VAT Decree-Law gives you up to 14 days from the date of supply to issue the tax invoice. Many businesses invoice a few days after the supply takes place. By then, the CBUAE rate for the actual date of supply has long been published and sits in the Central Bank's historical rates archive. In our view, the safer reading of Article 69 read together with VATP004 is this: where you invoice on a later day, use the published CBUAE rate for the date of supply, not the rate on the day you happen to raise the invoice. The previous-day allowance exists only for the window in which the date-of-supply rate has not yet been published. This is consistent with how VATP004 itself handles invoices raised after 17 May 2018 for earlier supplies, where it directs businesses to the historical rates for the relevant date.
That last paragraph reflects professional interpretation of how the two provisions fit together, and it is the position we would defend in an FTA review. What is beyond doubt is that "the rate on whatever day I got around to invoicing" is not what Article 69 says.
Which rate applies?
Four more rules that apply every time
1. Use the exact published rate, to every decimal place. VATP004 requires the rate exactly as published by the Central Bank, with the same number of decimal places. Rounding 3.672500 to 3.67 is non-compliant, even though the difference feels trivial. If your ERP only stores two decimal places for exchange rates, that is a system configuration problem to fix, not a justification.
2. Historical supplies use historical rates. For invoices raised after 17 May 2018 relating to supplies made before that date, VATP004 requires the historical rates published by the Central Bank. Invoices issued between 1 January 2018 and 16 May 2018, before the CBUAE series existed, did not need to be reissued provided they used a reliable source (the clarification names Thomson Reuters, Oanda and rates published by a UAE bank as examples) applied consistently.
3. Imported goods follow the Customs rate. For goods imports, the value auto-populated in Box 6 of the VAT return uses the exchange rate applied by Customs. VATP004 confirms no adjustment is needed even where the Customs rate differs from the CBUAE rate.
4. Imported services follow the CBUAE rate. For services subject to the reverse charge, convert using the CBUAE rate applicable on the date of supply when calculating the VAT to report.
Common mistakes we see in practice
| Mistake | Why it fails | The compliant approach |
|---|---|---|
| Using yesterday's rate on an invoice raised after that day's rate is published | The current day's rate exists and applies | Check the CBUAE site again for invoices raised in the evening |
| Rounding the rate to 2 decimals in the ERP | VATP004 requires the exact published rate | Configure the system to hold the full published precision |
| Applying the invoice-date rate when invoicing days after the supply | Article 69 anchors the rate to the date of supply | Pull the historical CBUAE rate for the supply date |
| Using a bank's or Reuters' rate because it is easier to automate | Only acceptable for the pre-17 May 2018 period | Automate against the CBUAE published rates |
| Omitting the applied rate from the invoice | Article 59 of the Executive Regulation requires it | Show the AED tax amount and the exchange rate on the invoice |
What happens if you get the rate wrong
An incorrect rate flows straight into the VAT figures. If the error understated output tax on your return, the correction route is a voluntary disclosure, which carries fixed and percentage-based administrative penalties under Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 49 of 2021.
The same penalty framework sets a fine of AED 2,500 per instance for failing to issue a tax invoice or alternative document when required, and in our view an invoice that fails the content requirements of Article 59, including the currency conversion requirements, is exposed to challenge on that basis.
There is also a commercial cost: your customer's input tax recovery rests on the invoice you gave them, and a defective invoice becomes their problem too.
None of this is dramatic if the process is right. It becomes expensive when a wrong rate convention has been baked into an ERP and repeated across hundreds of invoices.
E-invoicing makes this a system design question
Under Ministerial Decisions No. 243 and 244 of 2025, the UAE's Electronic Invoicing System begins its pilot and voluntary phase on 1 July 2026, becomes mandatory from 1 January 2027 for businesses with revenue of AED 50 million or more, and from 1 July 2027 for everyone else in scope. Invoices will be generated and exchanged through accredited service providers in a structured format, with far less room for a human to pause and check a rate.
The practical consequence: the exchange rate logic described in this article needs to live inside your billing system. That means an automated feed or lookup of CBUAE published rates at full precision, logic that selects the date-of-supply rate, and a documented fallback to the most recent published rate for invoices generated before the daily publication. Businesses configuring e-invoicing during 2026 should treat currency conversion as part of that project, not something to patch afterwards. The invoicing framework now sits in the VAT law itself: see the VAT law amendments that embed e-invoicing (VATP046).
Configuring e-invoicing in 2026? Build the rate logic in now — see our e-invoicing advisory and implementation service.
Key takeaway
Using the previous day's CBUAE rate is compliant when, and only when, you issue the tax invoice before the Central Bank publishes that day's rate. Once the daily rate is live, use it. When you invoice after the date of supply, use the published rate for the supply date. Always use the exact rate to every published decimal place, and always show the rate and the AED tax amount on the invoice itself.
Frequently asked questions
Can I always use the previous day's CBUAE rate to keep things simple?
No. The allowance in VATP004 applies only where the invoice is issued before that day's rate is published. Standardising on the previous day's rate for all invoices, including those raised in the evening or on later days, is not compliant.
What if I issue the invoice after 6pm?
Once the Central Bank has published the rate for the day, that rate applies to invoices raised from that point onwards. Check the CBUAE website rather than assuming the evening cut-off, because the clarification describes publication as happening from 6pm onwards rather than at a fixed minute.
Can I round the CBUAE rate to two decimal places?
No. VATP004 requires the exact rate as published, including the same number of decimal places. Update the system rather than truncating the rate.
Which rate applies to a supply made on a Friday or public holiday?
The Central Bank publishes rates for business days. Where no rate exists for the supply date, the practical approach, consistent with the logic of VATP004, is the most recent published rate. The clarification does not address this scenario expressly, so treat this as accepted practice rather than a stated rule.
Which rate do I use for imported goods?
The rate applied by Customs, which feeds the value auto-populated in Box 6 of the VAT return. VATP004 confirms no adjustment is required even if the Customs rate differs from the CBUAE rate. Imported services under the reverse charge use the CBUAE rate for the date of supply.
Does the tax invoice have to show the exchange rate?
Yes. Article 59 of the Executive Regulation requires a foreign currency tax invoice to show the tax amount payable in dirhams and the exchange rate applied.
Will these rules change under e-invoicing?
The conversion rules themselves are unchanged. What changes is that from the phased rollout under Ministerial Decision No. 244 of 2025, invoices will be generated through accredited service providers, so the rate logic must be configured in your systems in advance.
How Stevva can help
If your business invoices in foreign currencies, Stevva Tax can review your rate convention, invoice content and ERP configuration against VATP004 and the Executive Regulation, and correct historical positions through voluntary disclosure where needed. The fastest way to start is a WhatsApp message to +971 50 932 1257. You can also test the numbers yourself with the Stevva VAT calculator.
Disclaimer: This article is general information on UAE VAT rules as at 10 September 2026, not tax advice for a specific business. Confirm the position for your own transactions before relying on it.
Sources: FTA Public Clarification VATP004 (Use of Exchange Rates for VAT purposes); Federal Decree-Law No. 8 of 2017 on Value Added Tax, Articles 67 and 69; Cabinet Decision No. 52 of 2017 (Executive Regulation), Article 59, as amended by Cabinet Decision No. 100 of 2024; Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 49 of 2021; Ministerial Decisions No. 243 and 244 of 2025 (Electronic Invoicing System); Central Bank of the UAE exchange rates page.
Tushar Agarwal
Tushar is the Managing Director of Stevva, advising UAE businesses on VAT, corporate tax and regulatory compliance, with fixed fees agreed before the work starts.
Last updated 10 September 2026 · Reviewed against official FTA sources. This article is general information, not regulated tax or legal advice.