Starting November 15, 2024, the UAE has exempted crypto transfers and conversions from VAT.
Value Added Tax (VAT) rules have been changed by the Federal Tax Authority (FTA) of the UAE. The changes were made to the Executive Regulation of Federal Decree-Law No. 8 of 2017.
Following Cabinet Decision No. (100) of 2024, the modifications will take effect on November 15, and they will establish a VAT exemption for the transfer and conversion of virtual assets, such as cryptocurrencies.
The transfer and transmutation of virtual assets will now be exempt from VAT for citizens and businesses involved in crypto.
Article 30 pertains to the VAT treatment of commodities exports, with an emphasis on the reduction of the prerequisites for the application of the zero rate.
Exporters may now submit any of the following forms of documentation to establish the export: a customs declaration, transportation certificate, or commercial evidence.
In the past, the process was more stringent, necessitating the submission of numerous layers of evidence. The government is currently endeavoring to alleviate the burden on exporters by simplifying the documentary requirements.
Exemptions for excise products exported outside of the country are also in accordance with the regulations of the Excise Tax law.
There is a revision to the VAT treatment of exported services in Article 31. It establishes a condition that export services cannot be regarded as being conducted within the UAE or designated zones in accordance with the clauses outlined in the Decree-Law.
This modification effectively restricts the use of the zero rate for services exports, resulting in the standardization of specific services where their place of supply is located within the UAE.
The location of their use or enjoyment may influence the impact of services such as telecommunications, electronic services, and real estate.
The tax treatment of financial services is the subject of Article 42, which is the most significant amendment.
The amendment exempts additional services from VAT, including the management of investment funds, the transfer of ownership of virtual assets, and the conversion of virtual assets.
The exemption from VAT for the latter two (ownership transfer and conversion of virtual assets) is retroactively effective as of January 1, 2018.
Fund managers who supervise investments should determine whether their services qualify for VAT exemption.
The management of fund operations, investments, and performance monitoring are all VAT-exempt for fund managers who provide services to investment funds licensed in the UAE.
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