UAE Exempts Cryptocurrency Transfers and Conversions from Value Added Tax
Date: 2024-10-07 Author: Gabriel Deangelo Categories: IN WORLD
The UAE recently announced an exemption of cryptocurrency transfers and conversions from value added tax (VAT). These changes will come into effect on November 15, 2024.
On October 2, the Federal Tax Authority (FTA) of the UAE published Cabinet Resolution No. 100, which updated the VAT application rules. The new rules contain more than 30 changes related to various sectors of the economy.
According to information provided by consulting company PwC, the exemptions will apply to the management of investment funds and other cryptocurrency transactions. In addition, it is worth noting that the tax exemption on transfers and conversions of virtual assets will apply from January 1, 2018.
An important part of the updates was the decision to restore the input tax for companies working with cryptocurrencies. PwC clarifies that in the UAE, cryptocurrency is defined as “a representation of value that can be digitally traded or converted and used for investment purposes.”
UAE — Cryptocurrency-friendly
While countries like China and India have begun to take a more cautious approach to cryptocurrencies, the UAE is actively developing this market. The country is striving to create a favorable environment for blockchain and cryptocurrency businesses. The Dubai Virtual Asset Regulatory Authority plays an important role in this.
VAT exemption on cryptocurrency transfers and conversions may attract even more crypto companies to the country. The UAE’s positive attitude towards cryptocurrencies is also reflected in the growth of its market. According to a report by Chainalysis, the UAE attracted more than $30 billion in cryptocurrencies between July 2023 and June 2024.
This data places the country as the third largest crypto economy in the MENA region. Chainalysis also noted the rise of venture capital funds and blockchain companies in the UAE as a major factor driving the country’s growth.
As such, the UAE continues to move steadily toward becoming a major player in the global cryptocurrency market, creating an increasingly favorable environment for business and investment in this rapidly growing industry.
