UAE Introduces New VAT Exemptions for Cryptocurrency and Virtual Asset Activities

The UAE has implemented new VAT exemptions for specific cryptocurrency and virtual asset activities following recent amendments to the Executive Regulations. Approved by the UAE Cabinet, these updates clarify which digital assets are eligible for VAT exemption, with a focus on assets intended for investment purposes.

The exemption applies to digital assets that can be traded or converted, excluding fiat currencies and financial securities. It covers services related to the transfer, conversion, storage, and management of virtual assets, including cryptocurrency trading, as long as these services are not provided for a fee, discount, commission, or similar compensation.

The amendments also extend to investment fund management services, covering activities such as fund operations management and investment monitoring. This move aims to strengthen the UAE’s position as a global hub for investment activities and support the growth of the financial sector.

Businesses involved in these exempted activities are advised to review their financial strategies, as VAT incurred on related expenses may not be fully recoverable. The amendments will take effect on November 15, 2024.

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