The new rules come into play at the start of the next Barclays Premier League season - and require clubs to meet a series of stipulations.
Although City's losses have been halved, they still posted a loss of £97.9m in the annual report for the 2011-12 season. City's overall wage bill rose from £151.6m to £178.1m.
City are confident as £15m of the losses comes from infrastructure and youth development costs, while approximately £80m comes from contracts that pre-date 2010, from which City expect to get some kind of relief.
A club statement read: 'Whilst the 2011-12 financial results represent a further step towards achieving the club’s objective of long-term sustainability both on and off the field, the application of UEFA allowable reliefs for certain categories of expenditure and investment in 2011-12, position the club well for compliance with UEFA’s financial fair play regulations which come into effect in season 2013-14.'
City's annual figures also revealed that they have recorded whopping revenue of £231.1m - the first time they have smashed through the £200m mark.
While the results show marginal increases in gate receipts and TV revenue, it is in the commercial sector where City are making huge gains.
Revenue went up from £64.7m to £121.1m, underlining City's increased growing global exposure, which is being shown in all areas, from merchandise to club tours.
The fact that City have failed to qualify for the later stages of the Champions League again has cost them millions in sponsorship, TV and gate receipts.
The statement continued: 'This year’s report demonstrates the tangible and positive impact of four years of strategic investment in all operations since the acquisition of the Club by Sheikh Mansour bin Zayed in September 2008.
Chairman Khaldoon Al Mubarak recognises the historic on field achievements of 2011-12 and the impact on the club at home and overseas. He also emphasises, following the securing of planning permission, the importance of the City Football Academy (CFA) project to the future of the Club and the community in which it resides, calling it 'the most significant current initiative to secure the long-term sustainability of the Club’s football operations'.
Chief executive officer Ferran Soriano, who arrived at the club earlier this year after his time with Barcelona, said: 'What I have found is a club on the verge of a historic transformation, reinforced by a genuine commitment to doing things well. It is a club with a rich history and the potential for an even brighter future.'