United Arab Emirates officials announced that cryptocurrency transactions will be exempt from value-added tax (VAT), effective 15 November 2024. It’s also worth noting that this policy change also applies retroactively to transactions dating back to 1 January 2018.

The update from the Federal Tax Authority was first made available in Arabic on 2 October 2024, followed by an English translation on 4 October 2024. The exemption clarifies, for the first time, that digital assets, including the exchange and transfer of ownership of cryptocurrencies, will not be subject to the standard 5% VAT. According to coindesk.com, this decision aligns the tax treatment of digital assets with that of traditional financial services, many of which are already VAT-exempt in the UAE.

Representatives from the Métis Institute cited by the same source noted that by treating virtual assets similarly to traditional financial services, the UAE is providing a form of legitimacy to digital currencies. Payments and ecommerce trends in the UAE In October 2024, The Paypers discussed with Nameer Khan, Chairman of the MENA Fintech Association to explore the payments landscape of the UAE and the country’s adoption of new financial technologies. He concluded that the UAE’s regulatory framework ensures that fintech companies can continue to innovate, while the focus on security ensures that financial services remain secure and inclusive.

The introduction of clear guidelines around digital assets and the use of blockchain technologies demonstrates the UAE's commitment to staying ahead in the global financial race. Moreover, he noted that security is still a critical challenge as digital transactions increase. The UAE has made significant progress in building a robust cybersecurity infrastructure, but human vulnerability continues to be an area that requires ongoing education and innovation.

The collaboration between fintech companies, regulators, and financial institutions are important in addressing these security concerns. Source: Link .