UAE Exempts Crypto Transactions From Value Added Tax

As a researcher with a background in taxation and finance, I find this development by the UAE to be a significant stride towards the mainstream acceptance of cryptocurrencies. Having spent years observing and analyzing the complexities of the global financial market, it’s clear that this move aligns virtual assets with traditional financial services, a step that was long overdue.

In simpler terms, it means that cryptocurrency transactions are now VAT (Value-Added Tax) free in the United Arab Emirates, making this sector consistent with conventional financial services.

Starting Nov. 15, the new rule will be implemented retroactively, affecting transactions that occurred as early as January 1, 2018. The official announcement regarding this change by the Federal Tax Authority in both Arabic and English was released on October 2, 2024, and October 4, 2024, respectively.

For the initial occasion, this exemption clarifies that the tax is not applicable for digital assets. This includes trading and transferring ownership of these assets, implying that all transactions involving cryptocurrencies, such as transfers and conversions, are now exempt from the 5% charge.

Ankita Dhawan, a senior associate at Métis Institute, stated that the UAE has essentially grouped virtual assets together with traditional financial services, many of which are already VAT-exempt. This move gives legitimacy to virtual assets.