UAE’s FTA issues crypto VAT rules as adoption surges 33% to $56B – Details

The UAE’s Federal Tax Authority (FTA) has introduced a new framework for businesses that deal with digital currencies and VAT. For a long time, businesses conducting a taxable transaction involving cryptocurrency would simply report the crypto amount in their VAT return.

However, now with the new tax framework, businesses are required to convert the value of that digital currency into UAE dirhams (AED). The main purpose of this is to ensure that the transaction can properly be disclosed for VAT purposes.

Issued by the FTA, there is a three-step conversion mechanism to determine the dirham value contained in the Directive on Tax Transactions No. 3 of 2026.

The three main rules under the new framework

First, businesses must select three FTA-approved centralized crypto exchanges and use the same three platforms consistently throughout the calendar year.

The second step is to average the exchange rates from the three selected platforms using the rate available at the exact time of the transaction or when payment is received.

For example, if Bitcoin [BTC] is AED 400,000, AED 402,000, and AED 398,000 on the three exchanges, the average rate is AED 400,000. A payment of 0.01 BTC would therefore be valued at AED 4,000 for VAT reporting.