The United Arab Emirates (UAE) has made a significant move to boost crypto adoption by exempting crypto transactions from the country’s 5% value-added tax (VAT). This exemption is part of an amendment to the Executive Regulation of the Federal Decree Law on VAT, which will come into effect on November 15, 2024. The regulation will also apply retroactively to transactions conducted since January 1, 2018.
With this new rule, all crypto-related transactions in the UAE, including transfers and conversions, will no longer be subject to VAT. This change is a clear indication of the UAE’s commitment to integrating digital assets into its financial system and aligning crypto with other traditional financial services that are already VAT-free.
Market observers believe that this move will further boost crypto adoption in the UAE, which already has a higher adoption rate than the global average. The country’s progressive regulatory stance on digital assets has brought certainty to the market and attracted many users. Abdulla Al Dhaheri, CEO of the Blockchain Center in Abu Dhabi, emphasized the UAE’s commitment to innovation and building a world-leading digital economy.
The UAE’s proactive approach has positioned the country as a hub for decentralized finance (DeFi) and broader crypto activities. Several notable crypto firms have been drawn to the region, viewing it as a strategic gateway to expand into the Middle East. Tether, for example, announced plans to launch a stablecoin pegged to the UAE Dirham, while Ripple secured an in-principle license to operate within the UAE just last week.
Overall, the UAE’s decision to exempt crypto transactions from VAT is a significant step towards fostering a more welcoming environment for digital assets and solidifying its position as a leading player in the blockchain and cryptocurrency space.