The UAE authorities have canceled the 5% Value Added Tax (VAT) on all cryptocurrency transactions effective from January 1, 2018, reports PwC. This change exempts not only cryptocurrency exchanges but also additional services such as investment fund management, transfers, and conversion of virtual assets.

“The UAE has effectively placed digital assets on par with TradFi, legitimizing cryptocurrencies,” said Ankita Dhawan, Senior Research Fellow at Métis Institute. Companies can also request refunds for previously paid taxes.

Adoption of Digital Assets

According to Milkroad, the UAE, Singapore, and Turkey are among the top three countries with the highest levels of digital asset adoption.

On June 5, 2024, the UAE Central Bank approved amendments to its supervision of stablecoins, requiring them to be backed by dirhams and prohibiting pegging to other currencies.

Stablecoin Regulation

Earlier, the UAE Central Bank approved new rules for stablecoins, stating that they must be backed by dirhams and cannot be pegged to other currencies. This measure aims to enhance stability and transparency within the country’s crypto industry.