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The United Arab Emirates, particularly through its financial centers of Dubai and Abu Dhabi, continues to introduce initiatives and regulatory frameworks to attract cryptocurrency businesses and investors.
Consider the latest update: the United Arab Emirates announced value-added tax (VAT) exemptions for cryptocurrency transfers and conversions.
The changes published by the UAE will come into effect on November 15.
The Federal Tax Authority (FTA) published on October 2 Cabinet Decision No. (100) of 2024 to update the executive regulation related to VAT.
The updated executive regulation includes more than 30 amendments affecting various industries.
Federal Tax Authority, according to details shared by a business consulting firm PwCwill apply these exemptions to the management of investment funds and other activities related to cryptocurrencies.
Additionally, PwC reports that exemptions for the transfer and conversion of virtual assets are considered effective from January 1, 2018.
Additionally, the amendments address recovery of input tax for crypto companies. PwC explains that in the United Arab Emirates, cryptocurrencies are defined as a “representation of value that can be traded or converted digitally and used for investment purposes.”
The United Arab Emirates wants to be cryptocurrency friendly
While several countries, including China and India, have taken a step back when it comes to cryptocurrency adoption, the United Arab Emirates is embracing it.
The country has been actively working to create a favorable environment for blockchain and crypto companies. The Dubai Virtual Asset Regulatory Authority is also playing a crucial role in regulating virtual assets in the UAE.
VAT exemptions for cryptocurrency transfers and conversions could attract more cryptocurrency companies to the UAE.
The country's positive outlook on cryptocurrencies is also visible in its growth in the market. A recent report from crypto-adoption-2024/” target=”_blank” rel=”nofollow”>Chain analysis He highlighted that the United Arab Emirates received more than $30 billion in cryptocurrencies between July 2023 and June 2024.
This number has propelled the country to the top as the third largest crypto economy in MENA. Chainalysis also cited the increase in the number of venture capital funds and blockchain businesses in the UAE as a factor contributing to the country's growth.
