Good tax news. The United Arab Emirates is definitely going all out on cryptocurrencies and its federal government intends to make the country an essential hub in the global crypto finance landscape. We already knew the welcoming regulatory and tax framework of Dubai, but it is the whole country which is relaxing its rules and local regulators are in the process of tuning their violins to propel the seven Emirates to the forefront of Web3 international. Recently, VAT exemptions have been announced and which will even be retroactive, enough to further attract industry players who are already flocking in large numbers to the shores of the Persian Gulf. Let’s see together what these new rules will change.
FTA makes some retroactive changes to VAT regulations
From an official point of view, the Federal Tax Authority (FTA) communicated on October 2 the modified version of the Executive Regulation of Federal Decree-Law No. 8 of 2017 on value added tax (VAT) and explained that these changes “aim to improve clarity and provide additional detail on key provisions and procedures as well as to align with previous amendments to the Decree-Law and other relevant tax laws”.
In fact, the country is going exempt from VAT THE cryptoasset transfers and conversions as well as the management of investment funds and these first two measures will be applied retroactively from January 1, 2018 ! The company audit specialist PricewaterhouseCoopers (PwC) has published a document about these new VAT exemptions and it details in particular what is considered a digital asset:
“Virtual assets are defined as the digital representation of value that can be digitally traded or converted and that can be used for investment purposes, but it does not include digital representations of fiat currencies or financial securities. »
Definition of virtual assets affected by the VAT exemption – Source: Cointelegraph
We can therefore deduce that the stablecoins and the RWA or tokenisation are not affected by these VAT changes.
The United Arab Emirates confirms that it is indeed a paradise for cryptocurrency professionals
The character retroactive measures is important and PwC specialists invite the companies concerned to review all of their past accounting in order to reanalyze subsequent VAT returns and possibly recover money from the relevant authorities. But in fact, why such an announcement when the country was already known for its accommodating taxation with the financial sector as a whole and with cryptocurrency in particular?
We can put forward some avenues such as that of a federal harmonization around local regulations such as those of Dubai or Abu Dhabi in order to provide more clarity at the national level. Likewise, the retroactive aspect perhaps allows us to reassure certain actors present in the country who had already implemented this type of practice, but who were awaiting validation from the administration, finally, by making this type of announcement in the city and the worldthe United Arab Emirates sends a message clair to the rest of the world: come and do business with us!
Singapore, Hong Kong and the United Arab Emirates are the three countries in the world with the best score in Henley Crypto Adoption Index 2024 and clearly, the federal state of the Persian Gulf intends to remain on the podium, or even grab a place or two.
Teacher in the city as well as on stage, popularizing and explaining is my daily life. A practicing crypto-agnostic, I seek light in the darkness of the internets while trying to avoid factional quarrels! While waiting for the revelation, I am buying Bitcoin for my children and I am enthusiastic about projects aimed at the general public.
