New UAE VAT Rules to Include Exemptions for Crypto

The UAE Federal Tax Authority (FTA) has announced significant amendments to the Executive Regulation of Federal Decree-Law No. 8 of 2017 on Value Added Tax (VAT).

These changes, which come into effect on November 15, 2024, under Cabinet Decision No. 100 of 2024, aim to enhance clarity, provide detailed guidelines, and align VAT procedures with broader tax legislation.

New UAE VAT Rules for November

The amendments aim to refine existing provisions to ensure compliance and transparency in the UAE’s evolving tax landscape. The changes target key areas, including the export of goods and services, financial services, and virtual assets. Among the most notable changes are revisions to Articles 30, 31, 42, and 46, which are likely to have the most significant impact on businesses.

Export of Goods and Services

Article 30 amendments seek to reduce the documentation burden for businesses applying zero-rate VAT on exported goods. Companies can soon submit various forms of evidence, such as customs declarations, shipping certificates, or official proof of customs duty suspension. These will simplify compliance while aligning with other tax regulations, including those governing excise goods.

Article 31 adds an additional requirement for zero-rated export of services. Businesses must ensure that the services are not performed in the UAE or its Designated Zones under specific provisions. This narrows the scope for zero-rated exports, particularly for services related to real estate, telecommunications, or electronic services. These may now be subject to standard VAT if deemed supplied in the UAE.

Financial Services and Virtual Assets

Article 42 introduces VAT exemptions for several financial services, including the management of investment funds and the transfer or conversion of virtual assets, such as cryptocurrencies. The exemptions for virtual assets will be retroactive, effective from January 1, 2018, which may prompt businesses involved in cryptocurrency trading to reassess their past VAT filings. Businesses dealing with virtual assets should analyze how these exemptions affect their input tax recovery and determine whether voluntary disclosures are necessary to correct previous returns.

For fund managers, the UAE VAT exemption applies to services independently provided for consideration to licensed funds. This change could affect both VAT recovery positions and costs for funds procuring services from managers inside or outside the country.

Composite Supplies

The amendment to Article 46 introduces new guidance for determining VAT treatment when a single transaction involves multiple components. When there is no principal supply, the VAT rate is determined by evaluating the nature of the entire supply. This ensures that transactions are taxed appropriately.

The Shib Daily reported earlier that Dubai has implemented stricter regulations for cryptocurrency-related marketing content. The Virtual Asset Regulatory Authority (VARA) issued new guidelines requiring all promotional materials for digital assets to include a prominent disclaimer. It has also warned potential investors about the financial risks involved. These measures aim to enhance consumer protection and ensure transparency in the rapidly growing digital asset market.

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Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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