The United Arab Emirates has taken a major step towards developing its cryptocurrency industry by exempting cryptocurrency transactions from value-added tax (VAT). The move, which comes into effect on November 15, 2024, is retrospective, applying to transactions made from January 1, 2018 onwards. White papers and updates were published on October 2 and 4, 2024, in Arabic and English respectively, demonstrating the transparency of the process and the intent to attract international investment.
This exemption clearly states that tax liabilities do not apply to digital assets, including their exchange and transfer of ownership. As such, all cryptocurrency transfers and conversions in the UAE are now exempt from the 5% tax. This has potential positive implications for the growth and development of the cryptocurrency market in the country, making it more attractive to local and international investors.
Ankita Dhawan, Senior Research Fellow at the Metis Institute, highlights that the UAE’s decision to classify virtual assets on par with traditional financial services, which are partially exempt from VAT, confirms the legitimacy of the sector. This creates a more robust and transparent legal environment for businesses and cryptocurrency users, which will certainly contribute to the further development of innovative financial solutions in the country and strengthen its position as a financial hub in the Middle East.
