UAE exempts crypto transactions from 5% VAT
The United Arab Emirates (UAE) has exempted all crypto transactions from having to pay value-added tax (VAT), a significant step to support the market.
The Federal Tax Authority (FTA) published amendments to the country’s value-added tax rules on 2 October. The new policy, which takes effect from 15 November, applies retrospectively to transactions dating as far back as 1 January 2018.
All crypto transfers and conversions from now as well as the past till 2018, made by both individuals or businesses, will be exempt from the previously imposed 5 percent VAT. This means that those who have previously paid VAT on crypto transactions could be eligible for refunds from the UAE government.
A notable move that showcases the UAE as a crypto-friendly nation, the policy establishes for the first time that VAT does not apply to digital assets.
Ankita Dhawan, a senior associate at Métis Institute, a dispute resolution think tank, said, “The UAE has essentially classified virtual assets in the same bucket as traditional financial services—several of which are already exempt from VAT. This legitimises VAs.”
By doing so, the UAE aims to attract more investments and solidify its position as a crypto hub. The nation is providing its residents and businesses with more financial flexibility and incentives to engage in crypto transactions.
A potential precedent
As the nation fosters a more supportive environment for digital assets, it is positioning itself as a global hub for crypto innovation and investment. It also underscores the broader trend of crypto adoption across the Middle East.
The UAE and other Gulf nations have been investing in blockchain infrastructure, regulatory frameworks, and strategic partnerships that promote the crypto industry.
The latest move by the UAE is potentially setting a precedent that could influence other countries, especially as competition for crypto investment intensifies globally.
Praising the policy and urging other nations like the US to adopt similar measures, a crypto trader, Borovik, said, “UAE just eliminated all taxes on crypto transactions. The US needs to follow if they want to stay competitive.”
