UAE sets out how crypto payments must be converted to dirhams for VAT

The UAE’s Federal Tax Authority (FTA) has issued a new directive setting out how businesses must convert the value of digital currencies into UAE dirhams when filing their Value Added Tax (VAT) returns.

Directive on Tax Transactions No. 3 of 2026 applies to any taxable person supplying a digital currency, or supplying goods or services where the consideration is received in digital currency.

Under the directive, such businesses must convert the value of the digital currency into dirhams for disclosure purposes in their tax return, following a specific three-step mechanism. 

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The UAE is seeing rapid growth in digital-asset adoption, with activity increasingly extending beyond speculative crypto trading into payments and commercial use.

According to Chainalysis’ 2025 Geography of Cryptocurrency Report, the UAE received more than $56 billion in cryptocurrency value in the 2024-25 reporting period, representing 33 per cent year-on-year growth.

More significantly, smaller retail crypto transactions worth less than $1,000 increased 88.1 per cent, while large retail transactions rose 83.6 per cent.

Chainalysis said the expansion in merchant services suggests crypto is moving towards more practical, everyday uses among consumers and businesses.