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UAE exempts crypto transfers and conversions from VAT

UAE exempts crypto transfers and conversions from VAT

GrafaGrafa2024/10/07 02:50
By:Isaac Francis

The United Arab Emirates (UAE) has announced amendments to its value-added tax (VAT) regulations, exempting cryptocurrency transfers and conversions from VAT.

These changes, published by the UAE’s Federal Tax Authority (FTA) on October 2, position the UAE as a more crypto-friendly jurisdiction, potentially enhancing its attractiveness for digital asset transactions.

The amendments, which include VAT exemptions for managing investment funds and virtual asset transfers, are being applied retroactively from January 1, 2018.

According to PwC, a business consultancy firm, virtual assets in the UAE are defined as "a representation of value that can be digitally traded or converted and can be used for investment purposes."

However, this definition excludes fiat currencies and financial securities.

PwC advised companies involved in virtual assets to review how this exemption affects their historical VAT positions, particularly in relation to input tax recovery.

Input VAT recovery allows registered businesses to claim back VAT paid on eligible business purchases.

PwC also noted that companies might need to correct past returns through voluntary disclosures.

In addition to VAT exemptions, the UAE has been updating its virtual asset regulations.

On September 9, Dubai’s Virtual Asset Regulatory Authority (VARA) and the Securities and Commodities Authority (SCA) agreed to jointly supervise virtual asset service providers (VASPs).

This agreement enables VASPs licensed by VARA to operate across the UAE under SCA registration by default.

Further regulatory updates have also tightened rules around crypto marketing.

VARA now requires firms promoting digital asset investments to include a disclaimer in their marketing material, warning that "virtual assets may lose their value in full or in part and are subject to extreme volatility."

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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