- UAE exempts all cryptocurrency transactions and conversions from VAT starting November 15, 2024
- A proactive crypto stance continues to make the UAE an increasingly key player
- The UAE is among the top 40 countries in terms of crypto inflows and is actively contributing to DeFi development
The United Arab Emirates exempts cryptocurrency transactions and conversions from Value Added Tax (VAT), once again taking a proactive step towards the crypto industry.
In addition to the ever-improving infrastructure and regulations for crypto, this is another incentive for investors and blockchain projects that makes the United Arab Emirates one of the key players in the crypto world.
Details on Exempting Cryptocurrency From VAT in the UAE
On October 2, 2024, the UAE Federal Tax Authority (FTA) announced that they have revised the current tax regulations to simplify them for both individuals and the corporate sector.
The previous VAT of 5% will be abolished from November 15, 2024, which implies a greater inflow of investments into the crypto sector, as well as the elimination of additional financial burden for crypto companies, many of which already name the UAE as one of the most favorable jurisdictions.
According to Chainalysis, from July 2023 to June 2024, the UAE received over $30 billion in cryptocurrency, placing the country in the global top 40 for crypto inflows and making it the third-largest crypto economy in the MENA (Middle East & North Africa) region.
It is also notable that this is not UAE’s first tax simplification and in 2018 applied VAT exemptions for investment fund management, asset transfer, and virtual asset conversion, and it is particularly interesting that it is likely that many companies will also be able to get a refund of previously paid taxes.
Crypto trader Borovik commented:
“UAE just eliminated all taxes on crypto transactions. The US needs to follow if they want to be competitive.”
Conclusion
UAE’s consistent and proactive steps are paying off, and it is particularly noteworthy that this is being done by a country that could easily trade oil for decades to come.
However, the UAE leaders are really looking to the future, and with real action are ahead of many jurisdictions that are making a lot of noise around adopting pro-crypto initiatives, but slowing down in their implementation.
We will continue to watch the UAE’s role in the crypto sector gain in importance, but so far it looks like they are not going to turn away from this direction.
