Some Crypto Activities Are Now Exempt From VAT in UAE; Here Is All You Need To Know

The United Arab Emirates has incorporated Value Added Tax in its tax framework since 2018. The VAT law levies a 5 per cent tax on the supply of products and services. The VAT law makes only a few exemptions to the VAT available e.g., residential properties, local transport, some financial services, etc. However, the Cabinet of Ministers has recently added a new major exemption from VAT i.e., crypto activities. The new Cabinet Decision No. 100 of 2024 was released by the MoF (Ministry of Finance) on 2nd October which states the exemption of some virtual assets, for example, NFTs and cryptocurrencies (e.g., Bitcoin). Read ahead to learn more about it.

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What are Virtual Assets?

To understand the provisions of this new exemption, you must know what virtual assets really include. The Cabinet Decision No. 100 of 2024 explains the features of Virtual Assets as;

• These are digitally represented values.
• These can be converted or traded digitally.
• These can be used for investment reasons.
• These are not digitally represented fiat currencies.
• These are not digitally represented financial securities.

Exemption of Virtual Assets from VAT

The original VAT law of 2018 had exempted some financial services from paying VAT in UAE but at that time virtual assets were not included in it. However, the amendments introduced by the latest decision include virtual assets when stating exemptions for financial services. According to the latest decision;

• If someone keeps, controls or manages virtual assets, VAT exemption is available for this.
• If someone converts virtual assets, a VAT exemption is available for this.
• If someone is transferring the ownership i.e., selling virtual assets, VAT exemption is available for this. This includes virtual currencies like Bitcoin, Tether, Ethereum, etc.

Cryptocurrency Exempt from VAT: Good News for Crypto Traders 

Cryptocurrencies are regulated by the Securities & Commodities Authority (SCA) and the Financial Services Regulatory Authority (FSRA) in UAE. The UAE has always welcomed cryptocurrency traders and investors. As part of the UAE’s future development strategies, the Central Bank of the United Arab Emirates is likely to introduce its own digital currency. This clearly demonstrates that the future of cryptocurrencies is bright in the UAE. Moreover, the exemption given to some activities regarding cryptocurrencies and NFTs will open more doors of opportunity for crypto traders and investors. The purpose behind this initiative is to attract crypto investors in the UAE digital market.

Seek VAT Guidance from Expert Tax Gian

If you are a crypto trader or crypto investor, new VAT exemptions can bring great benefits for you. You can seek guidance from experts about how VAT applies to your specific activities and how you can benefit from exemptions. You can also contact our professional tax advisors to talk about any VAT or other tax issues. Our qualified and experienced tax agents will help you according to your specific tax situation.