Starting November 15, 2024, the UAE will eliminate Value Added Tax (VAT) on cryptocurrency transactions, a strategic move designed to invigorate the sector and enhance the nation’s appeal to crypto businesses and investors.
This policy shift, announced by the Federal Tax Authority (FTA), removes the previous 5% tax that posed challenges for market entry, thereby reinforcing Dubai’s status as a global crypto and blockchain hub.
The UAE’s proactive approach to creating a crypto-friendly environment sets it apart from countries with more stringent regulations. The exemption not only simplifies operations for individuals and companies but also aligns with the UAE’s ongoing efforts to foster a progressive regulatory framework for crypto and blockchain projects. Since 2018, the UAE has already provided VAT exemptions for investment fund management and asset transfers.
Moreover, those who paid VAT on crypto transactions since 2018 may be eligible for refunds, encouraging transparency and compliance. Crypto trader Borovik has lauded this initiative, suggesting that other nations, particularly the US, should consider similar measures to remain competitive in the global market.
The UAE’s crypto economy is thriving, with over $30 billion in cryptocurrency transactions recorded between July 2023 and June 2024, making it the third-largest in the MENA region.
A recent Chainalysis report indicates a significant rise in decentralized finance (DeFi) services, with a 74% increase to $3.4 billion and a staggering 87% surge in decentralized exchanges, reaching $11.3 billion.
This new VAT exemption positions the UAE as a prime destination for venture capitalists and blockchain enterprises, bolstering its ambition to lead in the crypto and blockchain landscape in the years to come.
