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UAE’s Federal Tax Authority issued updated VAT guidance on virtual assets, applying retroactively from January 1, 2018, offering clarity on definitions and exemptions for transfer, custody, and management services.
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Transfers and conversions of virtual assets are VAT-exempt since 2018, while custody and management services are exempt only if provided without explicit fees, commissions, or other remuneration.
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Businesses face complexity in determining whether transactions qualify for exemption, especially due to fluctuating crypto values and the absence of official exchange rates or monetary consideration.
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Stablecoins and NFTs present classification challenges, with regulatory uncertainty over their treatment under VAT due to conflicting definitions and exclusions from crypto token scope by some authorities.
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Input VAT recovery is restricted for exempt activities, requiring businesses to assess their apportionment methods, consider year-end adjustments, or apply for special recovery methods to maintain compliance.
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