💪UAE🇦🇪: The regulator exempts cryptocurrency transactions from VAT

💪UAE🇦🇪: The regulator exempts cryptocurrency transactions from VAT

A significant move in the United Arab Emirates: the new regulation retroactively exempts cryptocurrency transactions made since January 1, 2018.

➡️ On October 2, the Federal Tax Authority (FTA) published amendments, placing digital assets under the same regulatory regime as traditional financial services.
On October 2, the Federal Tax Authority (FTA) published amendments that place digital assets under the same regulatory framework as traditional financial services.

➡️ This means that transfers and conversions of Bitcoin, Ethereum, and other digital tokens will no longer incur the standard 5% VAT. As a result, companies that previously paid VAT on cryptocurrency transactions can now claim tax refunds.

➡️ The exemption also applies to services related to investment fund management and the conversion of virtual assets.

➡️ System benefits:
• Companies operating in the UAE can reduce their operating costs, gaining a competitive advantage.
• Traditional banks will find it easier to integrate digital assets into their services.
• Tax incentives could enhance market liquidity, attracting more investors.

➡️ Drawbacks:
• Companies will have to review and correct their past VAT filings, which could be laborious.
• This change also requires voluntary disclosure of information, which may be challenging for some companies.
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