The United Arab Emirates (UAE) has exempted virtual currency transactions from the country’s 5% value added tax (VAT).
This exemption is part of the amendments to the Federal Decree Law Enforcement Regulations regarding VAT.
According to a document published on October 4, the amendments are scheduled to come into effect on November 15, 2024, but the regulations will also apply retroactively to transactions made after January 1, 2018.
With this new regulation, all crypto-related transactions, including remittances and conversions, will no longer be subject to VAT in the UAE. As a result, cryptocurrency companies must review past VAT filings to ensure compliance with the latest regulations.
What does this mean for cryptocurrency adoption in the UAE?
Market observers suggest the move reflects the UAE’s continued efforts to integrate digital assets into its financial system. By exempting cryptocurrencies, the country will align them with other traditional financial services that are already exempt from value-added tax.
A recent report by Chainalysis highlighted that the UAE’s cryptocurrency adoption rate is above the global average. This is likely because a clear and progressive regulatory stance on digital assets brings certainty to the market.
Abdullah Al Dhaheri, CEO of Abu Dhabi Blockchain Center, highlighted the UAE’s commitment to innovation. He said the UAE continues to lead blockchain development under its visionary leadership.
He further stated:
“The removal of value-added tax on the transfer and conversion of crypto assets will strengthen the UAE’s efforts to build a world-leading digital economy, attracting the best talent and investment from around the world.”
As a result, the UAE’s proactive approach has attracted many users and positioned the country as a hub for DeFi and broader cryptocurrency activity.
Notably, several prominent cryptocurrency companies have been drawn to the region, seeing it as a strategic gateway for expansion into the Middle East. Tether, for example, recently announced plans to launch a stablecoin pegged to the UAE dirham. At the same time, cryptocurrency company Ripple just last week secured an in-principle license to operate within the UAE.
mentioned in this article
Source link