Regulatory amendments in the UAE will remove value-added taxes on crypto transfers and conversions as a move towards favorable crypto tax policies.
A PwC report has underlined the new crypto tax policy adopted by regulators in the UAE. According to the report, amendments in the country will lead to no value-added taxes on crypto transfers and conversions. This new advantageous crypto tax policy could be an enabler for higher adoption as well.
The UAE Federal Tax Authority (FTA)has moved the amendments to the tax laws. Meanwhile, the PwC report mentions how the management of investment funds, conversion of virtual assets, and ownership transfers of virtual assets like crypto come under the purview of this law. At the same time, the removal of value-added tax on crypto transfers and conversions is effective from as early as January 1, 2018.
Further, the report stated, “Businesses dealing with virtual assets should analyze the impact of the exemption on their (retrospective) VAT position, especially in respect to their input tax recovery. Voluntary disclosures may be required to correct historic returns.”
In conclusion, the report highlights how entities dealing with virtual assets would have to assess their eligibility for the exemption. Meanwhile, the exemption could be a big catalyst for a jump in crypto transactions. Across the globe, taxation of crypto transactions is an important issue, with the sector lobbying for better policies. The UAE’s decision in this regard could be a guiding force for other countries as well.
However, this is not the first time the UAE has made beneficial policy decisions for the crypto industry. The UAE government has shown strong support for blockchain technology and its potential applications. Besides, several initiatives have fostered innovation and collaboration within the crypto ecosystem. From incentives for innovation to better regulatory clarity, the UAE has become a strategic base for crypto firms.
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