In a significant shift, the United Arab Emirates (UAE) has amended its value-added tax (VAT) regulations to exclude digital asset transfers and conversions, including cryptocurrencies, from VAT. On October 2, the UAE’s Federal Tax Authority (FTA) announced these changes, which apply retroactively from January 1, 2018. Business consultancy PwC confirmed that the new rules cover additional exemptions, such as managing investment funds and converting virtual assets.

Virtual asset firms in the UAE must now review their tax positions, especially regarding input tax recovery. According to PwC, virtual assets are defined as digital representations of value that can be traded or used for investment, excluding fiat currencies and financial securities. The auditing firm urged businesses to assess how the new exemptions affect their past VAT filings, as voluntary disclosures might be necessary.

The UAE’s proactive stance on crypto doesn’t end there. The country continues to fine-tune its regulations for the growing virtual asset market. Dubai’s Virtual Asset Regulatory Authority (VARA) and the Securities and Commodities Authority (SCA) have joined forces to supervise virtual asset service providers (VASPs). This agreement allows VASPs licensed by VARA to also operate across the wider UAE.

Additionally, VARA has tightened rules on crypto marketing. As of September 26, firms promoting digital asset investments must include a disclaimer warning investors about the extreme volatility of virtual assets, stating that these assets could lose their value partially or entirely.

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