The United Arab Emirates has updated its tax laws to remove the country’s 5% VAT fee from most crypto transfers. This exemption applies to the conversion and trading of virtual assets. Eligible businesses can request tax returns for transfers dating back to January 1, 2018.
The United Arab Emirates continues to establish itself as the Middle East’s cryptocurrency hub after approving legislation that would abolish value-added tax from the transfer of digital assets.
The country’s federal tax authority approved the move last week, and the changes are expected to take effect on November 15, 2024. Interestingly, the tax adjustment for virtual currencies will be retroactive to transactions made after January 1, 2018.
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Cryptocurrency conversion and transfer for historical VAT exemption
UAE VAT typically applies a flat rate of 5% on most goods and services. This is a significant amount for serious traders and institutional investors. Eliminating this fee for virtual asset transactions, including conversions between cryptocurrencies, will make the use of digital currencies significantly cheaper in the region.
strong!!
🇦🇪 The United Arab Emirates will abolish VAT (value added tax) on all crypto remittances.
This is a huge deal for individuals and businesses dealing with digital assets.
Don’t call yourself weak. pic.twitter.com/5HlzKl6wcT
— Kyle Chasse / DD🐸 (@kyle_chasse) October 6, 2024
Companies involved in the blockchain space will be able to claim refunds of VAT paid on eligible transfers going back to 2018, and will likely be required to make transaction records public.
According to a PWC press release, this change specifically applies to:
Management of investment funds…Transfer of ownership of virtual assets including virtual currency…[and] Conversion of virtual assets.
PWC
Web3 businesses benefit from UAE streamlining tax obligations
The news comes as part of broader legal reforms regarding cryptocurrencies around the world, with the United Arab Emirates updating several financial-related frameworks to better support modern Web3 infrastructure. .
A key move occurred in March 2022, when the country introduced local crypto asset regulators. The agency, along with the UAE’s main financial institution, the Securities and Commodities Authority (SCA), is tasked with supervising crypto exchanges in the region.
Changes in the way crypto assets are taxed in the UAE will provide significant relief to local companies in the blockchain space, increasing their cash flow to pursue innovative technology and support their customers.
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