In a move that could bolster the cryptocurrency industry in the United Arab Emirates, the country has announced that crypto transactions will be exempt from value-added tax (VAT). The decision, which takes effect on November 15, applies retroactively to transactions dating back to January 1, 2018.
The Federal Tax Authority’s announcement, first published in Arabic on October 2 and then in English on October 4, clarifies that the 5% VAT levy will no longer apply to the exchange and transfer of digital assets. This means that all cryptocurrency transfers and conversions will now be exempt from taxation.
The UAE’s decision to align crypto transactions with traditional financial services, many of which are already exempt from VAT, has been met with positive reactions from the industry. Ankita Dhawan, a senior associate at Métis Institute, a dispute resolution think tank, commented, “The UAE has essentially classified virtual assets in the same bucket as traditional financial services. This legitimizes VAs.”
This tax exemption is expected to attract more investors and businesses to the UAE’s cryptocurrency market. The country has already made significant strides in establishing itself as a regional hub for blockchain technology and innovation. This latest move further solidifies its position as a favorable jurisdiction for crypto-related activities.
Also Read: Ripple Secures In-Principle License in Dubai, Expanding Global Footprint
While the exemption is undoubtedly a positive development for the UAE’s crypto industry, it’s important to note that specific regulations and guidelines may still apply to certain aspects of cryptocurrency transactions. Investors and businesses operating in the UAE should stay informed about the latest developments and consult with legal and financial professionals to ensure compliance with all relevant laws and regulations.
Overall, the UAE’s decision to exempt crypto transactions from VAT is a significant step forward in recognizing and embracing the potential of digital assets. It positions the country as a leader in the global crypto landscape and could attract substantial investment and innovation in the years to come.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
