By not charging value-added tax (VAT) on any trades or conversions of digital assets, the United Arab Emirates (UAE) has taken a big step toward becoming a world leader in the bitcoin space. The goal of this new rule is to make things better for crypto companies and investors by getting rid of taxes on digital trades.
The UAE’s Federal Tax Authority (FTA) revealed changes to the country’s VAT rules on October 2. These changes will exempt bitcoin trades and conversions, as well as other services related to virtual assets. With the start of this change on January 1, 2018, businesses will be able to get VAT back on deals that happened in the past.
The waivers are meant to help the UAE’s growing cryptocurrency industry, especially in Dubai and Abu Dhabi, which have been working hard to bring in blockchain and crypto-related companies as financial hubs. With these changes to VAT, the UAE is solidifying its place as a top location for digital asset businesses around the world.
According to the rules in the UAE, virtual assets are digital representations of value that can be sold or used for business. The only things that this doesn’t cover are cash currencies or financial securities. Businesses that deal with virtual assets should look over their VAT positions and how they collect input tax to make sure they are following the new rules.
The UAE is taking this action as part of a larger plan to make the country more crypto-friendly. Besides not charging VAT, the country has been simplifying rules to better keep an eye on virtual asset service providers. New deals between the Securities and Commodities Authority (SCA) and Dubai’s Virtual Assets Regulatory Authority (VARA) aim to combine regulatory efforts, which will make it easier for companies to run across the UAE.
As the UAE continues to improve how it controls virtual goods, it has also made it harder to sell virtual goods. Companies that promote crypto investments must now include warnings about the risks of high volatility and the possible loss of value. This makes sure that buyers are aware of these risks.
By taking these steps, the UAE is making itself a top spot for blockchain innovation and digital assets. This will bring businesses and investors from around the world who are looking for a safe and helpful place to do business.
