Key Takeaways
- The UAE will exempt Bitcoin and crypto transfers and conversions from VAT, establishing itself as a more friendly jurisdiction for digital assets.
- The VAT exemptions for virtual assets will be applied retroactively from January 1, 2018, benefiting businesses handling Bitcoin and crypto transactions.
- Additional updates to UAE regulations include stricter oversight on Bitcoin and crypto marketing and mutual supervision for virtual asset service providers.
UAE Exempts Bitcoin and crypto Transfers and Conversions from VAT
The UAE has introduced amendments to its value-added tax (VAT) regulations, exempting Bitcoin and crypto transfers and conversions from VAT.
This move positions the UAE as a more Bitcoin and crypto-friendly jurisdiction for digital asset transactions.
The VAT exemptions will be applied retroactively from January 1, 2018, benefiting businesses involved in Bitcoin and crypto related activities.
Impact on Virtual Asset Firms and Input Tax Recovery
PwC advises virtual asset companies to carefully review their retrospective VAT positions to ensure compliance.
In the UAE, businesses can recover VAT on eligible purchases through input tax recovery, further benefiting companies dealing with virtual assets.
PwC also highlights that correcting past VAT returns might require voluntary disclosures from virtual asset firms.
UAE Enhances Broader Bitcoin and crypto Regulations
The UAE has been updating its virtual asset regulations, including new rules on Bitcoin and crypto marketing and additional regulatory oversight.
Dubai's Virtual Asset Regulatory Authority (VARA) and the Securities and Commodities Authority (SCA) have agreed to mutually supervise virtual asset service providers (VASPs).
Under these updates, VASPs licensed by VARA in Dubai will also be registered with the SCA, allowing them to operate across the UAE.
