The Federal Tax Authority (FTA) recently clarified the exchange rates to be used for tax invoices which are raised in AED as well as in other foreign currencies. This was announced through VAT Public Clarification VATP004.
According to the FTA, companies issuing tax invoices in foreign currencies will make use of the exchange rates applicable as per the date of supply. The circular also stated that only the exchange rates mentioned and documented by the UAE Central Bank are to be used in the tax invoices.
The clarification was circulated to UAE companies in May 2018. Several companies were uncertain if they had to reissue the old invoices (i.e. an invoice dated from January 2018 until the date of clarification 17 May 2018). However, to everyone’s relief, the FTA also quoted that, “There is no requirement for businesses to reissue historical tax invoices from periods prior to 17 May 2018 to show the Central Bank exchange rate, provided the exchange rate used is from a reliable source and the same source has been used consistently.”
Nevertheless, the FTA also noted that in case a tax invoice was issued after the 17 May 2018 and the date of supply was before 17 May 2018, companies need to make use of the older exchange rates published under the UAE Central Bank which were published in January 2018. According to the circular, business entities need to make use of exchange rates provided by the Central Bank of the UAE. The circular also said that in terms of failure to account for the due tax on imports as per the FTA tax compliances there could be penalties.
If you as a company are still not sure how to get your tax invoices tax compliant, book a VAT consultation with Shuraa Tax Consultants in Dubai. For more information call a Shuraa tax consultant in Dubai. Simply call on +971508912062. You may also drop in an email on info@shuraa.com or read more about Shuraa Tax Consultants on www.shuraatax.com.
