The VAE free crypto transactions from VAT

• The VAE has updated their tax laws to free crypto transactions from VAT.
• The change comes into force on November 15, but applies retrospectively to transactions from January 1, 2018.

The government of the United Arab Emirates has changed its regulations on VAT laws in order to exclude digital assets and associated transactions.

The document published by the Federal Tax Authority (FTA) also frees the activities of investment funds that manage digital assets, as well as the transfer of ownership of assets and their conversion into or from Fiat from VAT.

This development is part of a more comprehensive tightening of the regulations for digital assets by various regulatory authorities in the VAE. For example, the Securities Commodities Authorities (SCA), the leading financial supervisory authority of the VAE, with Dubai's authority, the Dubai Virtual Asset Regulatory Authority (Vara), have come together to jointly supervise the service providers for digital assets working in both countries.

A broader striving for legitimacy

The change in the VAE crypto tax law gives digital assets more legitimacy in the region, since the same value exemption also applies to traditional financial companies and transactions.

According to the PWC, virtual assets within the VAE are considered to be “presented or converted digitally and used for investment purposes”.