UAE Corporate Tax: Currency Conversion under Article 43 and FTA Decision No. 13 of 2023

The UAE corporate tax return is filed in dirhams. For a company that keeps its books in dirhams or in US dollars, conversion is a non-event. For a free zone entity reporting in euros, a branch reporting in pounds, or a group that consolidates in rupees, it is a real computation, and the law prescribes the source of the rate and the order in which methods may be used.

Article 43: everything in dirhams, at Central Bank rates

Article 43 of Federal Decree-Law No. 47 of 2022 reads, in the Ministry of Finance's English text:

"For the purposes of this Decree-Law, all amounts must be quantified in the United Arab Emirates dirham. Any 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 that may be prescribed in a decision issued by the Authority."

The Federal Tax Authority's corporate tax return guide repeats it at the level of the form: where input is required, enter the amount in AED.

FTA Decision No. 13 of 2023: the order of methods

The conditions were set by FTA Decision No. 13 of 2023, issued on 16 August 2023 and effective from 1 June 2023. It applies to a taxable person who uses a currency other than the dirham for accounting purposes, and it sets a strict order:

Three further conditions travel with the choice:

• The chosen method is used continuously throughout the tax period.
• You keep records of why the method was chosen, the rates used and the rationale.
• Any change of method is documented.

Note the direction of the test. The annual average is not a free simplification; it is the last resort after the two more precise methods have been shown to be impractical. With a modern ERP that already converts each posting, (a) is hard to argue away.

Why the method matters: 2025 in numbers

The dirham is pegged to the US dollar, and the Central Bank table shows USD at 3.6725 on every day of 2025. Every other currency moved. From the 261 official daily tables of 2025:

The euro moved by 16% between its low and its high. A euro-functional entity with EUR 2,000,000 of taxable income earned evenly through the year converts to AED 8,302,288 at the annual average. If the same income arose mostly in the last quarter, spot conversion gives a figure several percent higher, and at 9% tax the difference is tens of thousands of dirhams. That is why the Decision asks whether an average is an "acceptable approximate estimation" given the number and timing of transactions.

The averages above are simple arithmetic means of the official daily tables for the business days of the period. The Decision does not spell out the arithmetic, so state your computation in the working paper and keep it the same from year to year.

How this differs from the accounting translation

Under IFRS, which Ministerial Decision No. 114 of 2023 requires for corporate tax purposes (with IFRS for SMEs available up to AED 50 million of revenue), IAS 21 already has its own translation rules: transaction-date rates for income and expenses, closing rate for monetary items. Decision 13 is a tax rule about the rate source and the method for getting from accounting-currency figures to the dirham amounts in the return. In practice most teams align the two by using Central Bank of the UAE rates as the ERP's rate source in the first place, so that the tax conversion can be traced posting by posting.

Getting spot, monthly and annual rates

The Central Bank publishes a daily web table and monthly download files. The same official table by date, as JSON:

# spot rate for a transaction date
curl -H "Authorization: Bearer YOUR_KEY" \
  "https://allratestoday.com/api/v1/central-bank/cbuae/2025-12-31"

# daily series for one currency, to compute monthly or annual averages
curl -H "Authorization: Bearer YOUR_KEY" \
  "https://allratestoday.com/api/v1/central-bank/cbuae/history?symbol=EUR&from=2025-01-01&to=2025-12-31"

A monthly average is then one line in any language:

import pandas as pd
url = "https://raw.githubusercontent.com/AllRates-Today/central-bank-exchange-rates/main/data/cbuae/history/2025.csv"
df = pd.read_csv(url, parse_dates=["date"])
eur = df[df.base == "EUR"].set_index("date").value
print(eur.resample("ME").mean().round(6))   # twelve monthly averages
print(round(eur.mean(), 6))                 # 4.151144

The CSV archive is published under CC BY-NC 4.0 for research and internal non-commercial use; production systems use the API. See CBUAE exchange rate history for the file layout.

What to put in the working paper

• Functional currency and why the entity does not account in AED.
• The method chosen from (a), (b), (c), and why the earlier ones were not practical if you went down the list.
• The rate source: Central Bank of the UAE, with the dates of the tables used.
• For averages, the computation and the list of daily rates behind it.
• Confirmation that the same method was used for the whole tax period.

FAQ

In which currency is the UAE corporate tax return filed?

In UAE dirhams. Article 43 of Federal Decree-Law No. 47 of 2022 requires all amounts to be quantified in dirhams, and amounts in another currency to be converted at the applicable exchange rate set by the Central Bank of the UAE.

Can I use the annual average exchange rate for UAE corporate tax?

Only if the two earlier methods are not practical. FTA Decision No. 13 of 2023 sets an order: the Central Bank spot rate for each transaction date, then the average monthly rate where it gives an acceptable approximation, then the average annual rate.

Can I switch methods during the year?

No. The method must be used continuously throughout the tax period, and any change of method between periods must be documented together with the reasons.

Does a company reporting in US dollars have an exchange rate issue?

Barely. The Central Bank of the UAE table shows USD at 3.6725 every day because of the peg, so spot, monthly average and annual average all give the same figure. The conversion still has to be done and documented.

Does the Central Bank of the UAE publish the monthly and annual averages?

It publishes daily rates and monthly files of those daily rates. Averages are computed from them. A simple arithmetic mean of the official daily tables for the business days in the period is the usual approach; state it in your working papers.