The UAE is reinforcing its status as a leading hub for cryptocurrency and blockchain technology, particularly through its financial centers in Dubai and Abu Dhabi, with new initiatives and regulatory frameworks designed to attract crypto companies and investors.
In a significant development, the UAE has announced value-added tax (VAT) exemptions for crypto transfers and conversions.
The new regulations will take effect on November 15.
On October 2, the Federal Tax Authority (FTA) published Cabinet Decision No. (100) of 2024, updating executive regulations related to VAT.
This update features over 30 amendments affecting various sectors.
The FTA has confirmed that these exemptions will apply to investment fund management and various crypto-related activities.
Moreover, it has been clarified that the exemptions for virtual asset transfers and conversions will be retroactively effective from January 1, 2018.
Additionally, changes regarding input tax recovery for crypto companies are included in the amendments. 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’s Commitment to a Crypto-Friendly Environment
As other nations, such as China and India, shift towards stricter regulations on crypto, the UAE is positioning itself in stark contrast by fostering an inviting environment for blockchain and crypto enterprises.
The Virtual Assets Regulatory Authority in Dubai plays a vital role in overseeing the regulation of virtual assets in the region.
The recent VAT exemptions for crypto transactions are expected to draw more businesses to the UAE’s burgeoning crypto sector.
The country’s optimistic stance on cryptocurrency is further reinforced by its impressive market growth. A recent report revealed that the UAE attracted over $30 billion in cryptocurrency between July 2023 and June 2024, establishing it as the third-largest crypto economy in the MENA region.
The rise in venture capital investments and the proliferation of blockchain businesses are pivotal factors contributing to the UAE’s expanding crypto market.
