In a landmark decision, the United Arab Emirates (UAE) has officially exempted all cryptocurrency transactions from value-added tax (VAT), a move set to take effect on November 15, 2024.
This exemption applies retroactively to transactions dating back to January 1, 2018, ensuring that individuals and businesses alike will no longer face the 5% VAT levy on crypto transfers and conversions. The Federal Tax Authority (FTA) made the announcement on October 2, 2024, providing a significant boost to the region’s growing cryptocurrency sector.
The UAE’s decision aligns the treatment of digital assets with traditional financial services, many of which are already exempt from VAT.
Ankita Dhawan, a senior associate at Métis Institute, highlighted the significance of this move, stating, “The UAE has essentially classified virtual assets in the same bucket as traditional financial services—several of which are already exempt from VAT.” This reclassification marks a critical step in legitimizing cryptocurrencies as a mainstream financial asset.
By removing a significant financial barrier, the UAE aims to attract more crypto-related businesses and investors to its shores, making the region more competitive compared to other crypto-friendly nations like Germany and Hong Kong.
With the retroactive application of this tax change, businesses and individual users who previously paid VAT on crypto transactions may be eligible for refunds or adjustments, significantly benefiting the crypto ecosystem. The UAE continues to demonstrate its forward-thinking approach, ensuring it remains at the forefront of global crypto innovation.
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