The UAE, particularly through its Dubai and Abu Dhabi financial hubs, continues to introduce initiatives and regulatory frameworks to attract crypto companies and investors.
Consider the latest update: The UAE announced value-added tax (VAT) exemptions for crypto transfers and conversions.
The UAE’s published changes will take effect on Nov. 15.
You might also like: Florida lawmaker pitches ‘Bitcoin for Taxes’ bill
The Federal Tax Authority (FTA) on Oct. 2, published Cabinet Decision No. (100) of 2024 to update the executive regulation related to VAT.
The updated executive regulation includes more than 30 amendments affecting various industries.
The nation’s Federal Tax Authority, as per the details shared by business consultancy firm PwC, will apply these exemptions to managing investment funds and other crypto-related activities.
Additionally, PwC reports that the exemptions for the transfer and conversion of virtual assets are treated as effective from Jan. 1, 2018.
You might also like: Weekly NFT sales rise to $85.9m, Ethereum network leads the pack
Furthermore, the amendments address input tax recovery for crypto companies. PwC explains that in the UAE, crypto is defined as a “representation of value that can be digitally traded or converted and can be used for investment purposes.”
UAE wants to be crypto-friendly
While several countries, including China and India, have been taking a step back when it comes to crypto adoption, the UAE is embracing it.
The country has been actively working to create a favorable environment for blockchain and crypto businesses. Dubai’s Virtual Assets Regulatory Authority is also playing a crucial role in regulating virtual assets in the UAE.
The VAT exemptions for crypto transfers and conversions could attract more crypto businesses to the UAE.
The country’s positive outlook on crypto is also visible from its growth in the market. A recent report from Chainalysis highlighted that the UAE received over $30 billion in crypto between July 2023 and June 2024.
This number has brought the country to the top as MENA’s third-largest crypto economy. Chainalysis also mentioned the rise in the number of venture capital funds and blockchain businesses in the UAE as a factor contributing to the country’s growth.
Read more: UAE boosts sanctions, AML Policies for FATF compliance