UAE Brings Crypto in Line with Traditional Finance by Exempting VAT
Hassan, a Cryptonews.com journalist with 6+ years of experience in Web3 journalism, brings deep knowledge across Crypto, Web3 Gaming, NFTs, and Play-to-Earn sectors. His work has appeared in...
The United Arab Emirates (UAE) has made official the decision to exempt crypto transactions from value-added tax (VAT). This VAT exemption applies to the exchange and transfer of virtual assets.
Notably, the new rule is retroactive, meaning it covers crypto transactions from as far back as January 1, 2018. The official update was released in Arabic on October 2, 2024, followed by an English translation on October 4, 2024.
This VAT exemption provides significant relief to businesses and investors in the UAE’s cryptocurrency ecosystem.
The Federal Tax Authority (FTA) published amendments that bring digital assets under the same regulatory treatment as traditional financial services, which have long been exempt from VAT.
This means that transfers and conversions of cryptocurrencies such as Bitcoin, Ethereum, and other digital tokens will no longer be subject to the country’s standard 5% VAT levy.
The retroactive nature of this regulation, dating back to January 1, 2018, could have significant financial implications for businesses.
Companies that previously paid VAT on crypto-related transactions may now be eligible to reclaim those taxes, opening the door for potential refunds.
This has prompted advisory firms like PwC to urge businesses to reevaluate their past VAT positions, particularly concerning input tax recovery.
Input VAT recovery allows businesses to claim back VAT paid on eligible purchases, which could be a complex process given the retroactive application of the new rule.
The exemption also extends to services related to
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