UAE Introduces Clear Rules for Crypto VAT Reporting Amid Surging Adoption

The UAE's Federal Tax Authority (FTA) has introduced a new framework for businesses dealing with digital currencies and Value-Added Tax (VAT). This move comes as crypto adoption in the UAE surges, with Chainalysis reporting over $56 billion in crypto value received during 2024-25, up 33% year-on-year.

The FTA's directive requires businesses to convert the value of digital currencies into UAE dirhams (AED) for VAT purposes. To do this, they must select three FTA-approved centralized exchanges and use their exchange rates consistently throughout the calendar year.

The conversion mechanism involves averaging the exchange rates from the selected platforms using the rate available at the exact time of the transaction or when payment is received. For example, if Bitcoin's value on the three exchanges is AED 400,000, AED 402,000, and AED 398,000, the average rate would be AED 400,000.

The approved list includes Binance, Bybit Fintech, Deribit, Bitget, and Payward. Businesses must keep records of the rates from all three exchanges and evidence of how the average was calculated for compliance and potential FTA checks.