The UAE Federal Tax Authority (FTA) has announced amendments to the Executive Regulations of Federal Decree-Law No. 8 of 2017, which governs Value Added Tax (VAT).
These changes, effective November 15, introduce VAT exemptions for transfers and conversions of virtual assets—including cryptocurrencies—as per Cabinet Decision No. (100) of 2024.
Citizens and businesses engaged in cryptocurrency activities will now be exempt from VAT on virtual asset transfers and conversions.
Major Revisions to VAT Treatment for Exports
Simplified Export Documentation
Article 30 addresses VAT treatment for exported goods, focusing on relaxed eligibility for zero-rating. Exporters can now submit one of several document types—such as customs declarations, shipping certificates, or commercial evidence—to verify exports.
Previously stricter, the process required multiple proof layers. The streamlined requirements aim to reduce administrative burdens while aligning with excise tax laws, particularly exemptions for goods exported abroad.
Revised VAT Rules for Service Exports
Article 31 modifies VAT treatment for exported services, adding a clause that excludes services deemed supplied within the UAE or designated zones.
This narrows the scope of zero-rated services, subjecting some to standard VAT if their "place of supply" is domestic. Real estate, telecommunication, and professional services may be affected, depending on usage or location.
Tax Treatment of Financial Services (Including Cryptocurrency)
Key Exemptions for Virtual Assets
The most significant update lies in Article 42, which outlines VAT exemptions for financial services, specifically:
- Management of investment funds,
- Transfer of virtual asset ownership,
- Conversion of virtual assets.
The latter two are now explicitly VAT-exempt, retroactively effective from January 1, 2018.
Fund managers overseeing UAE-licensed investments should review if their services qualify for exemptions. Activities like fund operations, performance monitoring, and investment management are VAT-free, potentially reducing costs.
Implications for Crypto Businesses
Enterprises trading cryptocurrencies must reassess their VAT obligations. Those who previously paid VAT on virtual asset transactions may need to file voluntary disclosures to correct historical returns.
Composite Supplies Clarification
Article 46 adds a clause for composite supplies (multi-component offerings). It states that without a dominant component, VAT treatment should reflect the overall nature of the supply, simplifying calculations for bundled services/products.
FAQs
1. What types of virtual assets are VAT-exempt in the UAE?
All virtual assets—including cryptocurrencies, NFTs, and digital tokens—are exempt from VAT for transfers and conversions.
2. Can businesses claim refunds for past VAT payments on crypto transactions?
Yes, entities that paid VAT on exempted activities may submit voluntary disclosures to the FTA for adjustments.
3. How does the new export policy benefit UAE businesses?
Simplified documentation (e.g., single proof of export) reduces administrative hurdles, making international trade more efficient.
4. Are financial services like crypto trading fully tax-free now?
Only specific activities (ownership transfer, conversion) are VAT-exempt. Other financial services may still incur taxes based on their classification.
5. What’s the deadline for compliance with these changes?
The amendments take effect on November 15, 2024, but some exemptions apply retroactively to 2018.
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👉 Learn about UAE’s latest financial regulations for digital assets
The UAE continues to position itself as a crypto-friendly hub, balancing regulatory clarity with economic innovation. Businesses should consult tax experts to navigate these updates effectively.