- The UAE is enhancing its role in digital innovation and financial technology.
- The Federal Tax Authority issued a VAT update for cryptocurrency mining in January 2025.
- The update provides guidance for individuals and businesses in the UAE involved in crypto mining.
- It clarifies VAT implications for different mining scenarios to promote compliance and transparency.
- Cryptocurrency mining involves using mining rigs to validate blockchain transactions.
- Miners receive cryptocurrency rewards for contributing computational power.
- The FTA distinguishes between mining for personal account and mining on behalf of others.
- Mining for personal account is not a taxable supply as there is no identifiable service recipient.
- Input VAT on expenses for personal mining activities is not recoverable.
- Mining on behalf of others is a taxable supply when services are provided for a fee.
- Domestic clients are subject to a 5% VAT rate.
- Services to international clients may qualify for zero-rating if conditions are met.
- Input VAT on expenses related to taxable supplies can be recovered.
- Identifiable recipient presence is crucial for determining VAT treatment.
- Comprehensive documentation is essential for VAT compliance.
- Only expenses linked to taxable supplies are eligible for input VAT recovery.
Source: amca.ae
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
