The United Arab Emirates (UAE) has exempted crypto transactions from the 5% value-added tax (VAT).
This exemption is part of an amendment to the implementing regulations of the federal decree-law on VAT.
According to a document published on October 4, the amendment will come into force on November 15, 2024. However, the regulations will also apply retroactively to transactions carried out since January 1, 2018.
With this new rule, all cryptocurrency-related transactions, including transfers and conversions, will no longer be subject to VAT in the UAE. As a result, crypto businesses should review past VAT returns to ensure compliance with the updated regulations.
What does this mean for crypto adoption in the UAE?
Market observers suggest the move reflects the UAE’s ongoing efforts to integrate digital assets into its financial system. By exempting crypto, the country brings it in line with other traditional financial services already exempt from VAT.
A recent report from Chainalysis highlighted that the rate of crypto adoption in the UAE exceeds the global average. This is likely due to its clear and progressive regulatory stance on digital assets, which has brought certainty to the market.
Abdulla Al Dhaheri, CEO of the Blockchain Center in Abu Dhabi, highlighted the UAE’s commitment to innovation. He said the UAE continues to lead the way in blockchain development under visionary leadership.
He further added:
“With the elimination of VAT on crypto transfers and conversions, the UAE is strengthening its commitment to building a leading digital economy, attracting the best talent and investments from around the world.”
Therefore, the UAE’s proactive approach has attracted many users and positioned the country as a hub for broader DeFi and crypto activities.
Notably, several notable crypto companies have been attracted to the region, seeing it as a strategic gateway to expand into the Middle East. Tether, for example, recently announced plans to launch a stablecoin tied to the United Arab Emirates dirham. Meanwhile, crypto firm Ripple last week was granted a license in principle to operate in the United Arab Emirates.
