TechFlow reported on October 6 that, according to Cointelegraph, the United Arab Emirates (UAE) Federal Tax Authority (FTA) issued amendments to its Value Added Tax (VAT) regulations on October 2, announcing the exemption of VAT on transfers and exchanges of digital assets such as cryptocurrencies. This move aims to position the UAE as a more favorable jurisdiction for digital asset transactions. As interpreted by PwC, the new rules provide VAT exemptions for additional services, including investment fund management, and the transfer and exchange of virtual assets. These exemptions are retroactively effective from January 1, 2018.
The UAE defines virtual assets as "a representation of value that can be digitally traded or exchanged and is used for investment purposes," excluding fiat currencies and financial securities. PwC advises virtual asset-related businesses to assess the impact of this exemption on their retrospective VAT positions, with particular attention to input tax recovery. In addition to the VAT exemption, UAE regulators have recently been streamlining and updating virtual asset regulations. On September 9, the Dubai Virtual Assets Regulatory Authority (VARA) reached an agreement with the UAE's Securities and Commodities Authority (SCA) to jointly regulate Virtual Asset Service Providers (VASPs). Furthermore, VARA has strengthened oversight of cryptocurrency marketing, requiring relevant companies to prominently include disclaimers in promotional materials.
