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The Federal Tax Authority (FTA) of the United Arab Emirates (UAE) has announced significant changes to the country’s Value-Added Tax (VAT) regulations, introducing exemptions for cryptocurrencies and other virtual assets.
VAT Exemptions for Virtual Assets
The changes, published on October 2, 2024, apply retroactively from January 1, 2018. This allows businesses dealing with virtual assets to reclaim VAT they have previously paid. These updates follow the Cabinet Resolution No. 100 of 2024 and are part of broader amendments to the Executive Regulations of Federal Decree-Law No. 8 of 2017 on VAT.
The new rules, set to take effect on November 15, 2024, aim to provide more clarity on the VAT treatment of various services, including those involving digital assets.
Impact on Businesses
The FTA has urged businesses in the virtual asset sector to carefully assess how the VAT exemptions will impact their operations, particularly regarding input tax recovery. Companies may need to submit voluntary disclosures to correct past VAT refunds.
This development provides a significant boost to the cryptocurrency industry in the UAE, as it clarifies the tax treatment of virtual assets and allows for potential cost savings for businesses operating in this sector.
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