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Foreign currency translation

Applies
FY2024 onwards
Reviewed
Rule
UAE-CT-CURR-2024.1
By

Which exchange rate applies for UAE Corporate Tax?

All amounts are in UAE dirhams, and an amount in another currency is converted at the applicable rate set by the Central Bank of the UAE.

Per Federal Decree-Law No. 47 of 2022, Article 43, Currency

All amounts must be quantified in United Arab Emirates dirhams. An amount quantified in another currency must be converted at the applicable exchange rate set by the Central Bank of the United Arab Emirates, subject to any conditions the Authority may prescribe.

The dirham is the unit every figure under the Decree-Law is expressed in, and the Central Bank is the only source the article names for a rate. A conversion at a commercial bank's rate, or at a rate fixed in a contract, is a conversion this article does not authorise — which is the most common way the provision is quietly missed.

What the article requires

Two requirements in one sentence

  • Every amount, for every purpose of the Decree-Law, is quantified in dirhams
  • An amount in another currency is converted at the applicable exchange rate set by the Central Bank of the United Arab Emirates
  • Subject to any conditions prescribed in a decision issued by the Authority

Why the rate is not in the rate table

Every threshold in this engine is a published value with an effective range — a percentage or a ceiling that holds for a fiscal year and changes by decision. An exchange rate moves daily, is specific to a currency pair and a date, and is published by the Central Bank. Holding it as a threshold would make it look maintained, and a stale row would look like law. So it is a fact the reader supplies, with its date, and the rule tests its source.

Where an exchange difference goes

Translation under this article is not the same question as the tax treatment of a movement between two dates. Article 20(4)(d) puts an unrealised foreign exchange gain or loss within the unrealised gains and losses head, and that rule decides whether it enters Taxable Income in the period.

The Authority's conditions — FTA Decision No. 13 of 2023

  • (a) The Central Bank's spot rate for the date of the transaction, where the accounting system or the number of transactions makes it practical
  • (b) Otherwise the Central Bank's monthly average rate, where it gives an acceptable approximation of Corporate Tax Payable given the number and timing of transactions
  • (c) Otherwise the Central Bank's annual average rate
  • One method throughout the Tax Period, with records of the method, the rates and the reasons — and of the reason for any change

Order of testing

  1. 1

    Inputs requiring your determination

    Any input a person must decide and has not decided stops the computation. An undecided input is never read as a no.

  2. 2

    Source of the exchange rate

    Article 43 names the Central Bank of the United Arab Emirates. A rate from another source is not converted — the dirham figure requires the Central Bank rate for the relevant date.

  3. 3

    Conversion at the Central Bank rate

    The amount multiplied by the rate, with the rate and its date carried into the result so the conversion can be checked rather than trusted.

Examples

Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.

A US dollar receipt converted at the Central Bank rate

A UAE company records revenue of USD 2,000,000 and converts it at the Central Bank of the UAE rate of 3.6725 dirhams per dollar at the transaction date.

Computed

Converted as computed to AED 7,345,000 at a rate of 3.6725 dirhams per unit set by the Central Bank of the United Arab Emirates as at 2026-06-30, per Article 43, based on the figures you supplied. FTA Decision No. 13 of 2023 prescribes the Central Bank's spot rate for the transaction date where practical, then a monthly average, then an annual average. FTA Decision No. 13 of 2023 requires the same conversion method throughout the Tax Period, and records of the method chosen, the rates used and why — and of the reason for any change of method.

Workings

Amount in the other currencyas supplied — the unit is that currency, not the dirham
2,000,000
Exchange rate applieddirhams per unit, set by the Central Bank of the UAE as at 2026-06-30
3.6725
Amount quantified in dirhamsArticle 43 — the figure used for every purpose of the Decree-Law
AED 7,345,000

Decided by the conversion at the central bank rate

A euro payable converted at the Central Bank rate

A payable of EUR 450,000 at the year end, at a Central Bank rate of 3.9812 dirhams per euro.

Computed

Converted as computed to AED 1,791,540 at a rate of 3.9812 dirhams per unit set by the Central Bank of the United Arab Emirates as at 2026-12-31, per Article 43, based on the figures you supplied. FTA Decision No. 13 of 2023 prescribes the Central Bank's spot rate for the transaction date where practical, then a monthly average, then an annual average. FTA Decision No. 13 of 2023 requires the same conversion method throughout the Tax Period, and records of the method chosen, the rates used and why — and of the reason for any change of method.

Workings

Amount in the other currencyas supplied — the unit is that currency, not the dirham
450,000
Exchange rate applieddirhams per unit, set by the Central Bank of the UAE as at 2026-12-31
3.9812
Amount quantified in dirhamsArticle 43 — the figure used for every purpose of the Decree-Law
AED 1,791,540

Decided by the conversion at the central bank rate

A rate taken from the settling bank

The same euro payable, converted instead at the rate the company's own bank applied on settlement.

Computed

Not converted: Article 43 requires an amount quantified in another currency to be converted at the applicable exchange rate set by the Central Bank of the United Arab Emirates, and you have indicated this rate is from another source. The dirham figure to be used requires the Central Bank rate for the relevant date.

Decided by the source of the exchange rate

Try it

Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.

Not computed yet

3 inputs still need your determination:

  • What is the amount, as quantified in the other currency?
  • What is the exchange rate — dirhams per one unit of that currency?
  • Is the rate the applicable exchange rate set by the Central Bank of the United Arab Emirates, or from another source?

Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.

Sources

Share this rule

Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader