UAE exempts cryptocurrency transfers from value-added tax

The UAE continues to roll out initiatives and regulatory frameworks to attract crypto companies and investors, especially through the financial centers of Dubai and Abu Dhabi.

Consider the latest update: UAE announced value-added tax (VAT) exemptions for crypto transfers and conversions.

The changes published by the UAE will come into force on November 15.

The Federal Tax Office (FTA) published Cabinet Decision No. (100) 2024 on 2 October with the aim of updating the executive regulation on VAT.

The updated administrative regulation contains more than 30 changes affecting various sectors.

According to details shared by business consultancy firm PwC, the country’s Federal Tax Office will apply these exemptions to the management of investment funds and other crypto-related activities.

Additionally, PwC reports that exemptions for the transfer and conversion of virtual assets will apply as of January 1, 2018.

Additionally, the changes also address input tax collection for crypto companies. PwC explains that in the UAE, crypto is defined as “a representation of value that can be digitally bought, sold or converted and used for investment purposes.”

UAE wants to be crypto friendly

While many countries, including China and India, are stepping back on crypto adoption, the UAE is embracing it.

The country is actively working to create a favorable environment for blockchain and crypto businesses. Dubai’s Virtual Assets Regulatory Authority also plays an important role in regulating virtual assets in the UAE.

VAT exemptions for crypto transfers and conversions could attract more crypto businesses to the UAE.

The country’s positive outlook towards crypto is also evident from its growth in the market. A recent report from Chainalytics highlighted that the UAE received over $30 billion in cryptocurrencies between July 2023 and June 2024.

This number puts the country on top as the third largest crypto economy in MENA. Chainalytics also noted that the increase in the number of venture capital funds and blockchain businesses in the UAE is a contributing factor to the country’s growth.