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- The United Arab Emirates has updated its tax legislation to remove the nation’s 5% VAT fee from most crypto transfers.
- The exemption will apply to Virtual Asset conversions and transactions.
- Eligible businesses can claim a tax return on transfers as far back as January 1, 2018.
The United Arab Emirates continues cementing itself as a crypto hub in the Middle East after approving legislation that will remove Value Added Tax from digital asset transfers.
The nation’s Federal Tax Authority approved the move last week, with the changes set to come into effect on the 15th of November 2024. Interestingly, the tax adjustment for cryptocurrencies will be applied retroactively to transactions from Jan 1st, 2018 onwards.
Related: New Survey Shows Half of US Voters Believe Crypto an Important Election Issue
Crypto Conversions and Transfers to Receive Backdated VAT Exemptions
Value Added Tax in the UAE typically applies a flat rate charge to most goods and services of 5% – a significant sum for serious traders or institutional investors. Abolishing this fee for virtual asset transactions – including crypto-to-crypto conversions – will make using digital currencies in the region much cheaper.
BULLISH!!
UAE ELIMINATES VAT (VALUE-ADDED TAX) FOR ALL CRYPTO TRANSFERS.
THIS IS HUGE FOR PEOPLE AND COMPANIES DEALING WITH DIGITAL ASSETS!
DON’T YOU DARE SAY YOU’RE BEARISH. pic.twitter.com/5HlzKl6wcT
— Kyle Chassé / DD
(@kyle_chasse) October 6, 2024
Businesses engaged in the blockchain sector can claim back VAT paid on eligible transfers as far back as 2018, likely requiring companies to publish their transaction records.
According to a press release from PWC, the changes will specifically apply to:
The management of investment funds…Transferring ownership of Virtual Assets, including cryptocurrencies…[and] Converting Virtual Assets.
PWC
Web3 Businesses to Benefit as UAE Streamlines Tax Obligations
The news comes as part of broader legislative reform for crypto across the globe, with the United Arab Emirates updating several financial-related frameworks to better support modern Web3 infrastructure.
A significant move came in March 2022, when the nation introduced a local Virtual Assets Regulatory Authority. This body, alongside the UAE’s primary financial agency, the Securities and Commodities Authority (SCA), is charged with overseeing crypto exchanges within the region.
The changes to how virtual assets are taxed in the UAE will provide substantial relief to local businesses in the blockchain sector, giving them greater cash flow to pursue innovative technologies and support their customers.
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The post UAE Scraps Value Added Tax (VAT) for Crypto Transfers appeared first on Crypto News Australia.
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