Many people seemed surprised recently to hear that the UAE had apparently eliminated taxes on crypto, but it has now been clarified that this is not actually the case after all. Here’s the reality of the situation, according to crypto / digital assets industry focused lawyer Irina Heaver.
She explained via a social media post that the Cabinet Decision No. 100 of 2024 expanded the definition of Financial Services that are said to be “exempt” from VAT (value added tax) to include the “exchange of Virtual Assets,” along with the management and custody of Virtual Assets (under a particular set of conditions).
She added that there’s still a considerable 9% corporate tax on income as well as capital gains in the United Arab Emirates, including crypto-related earnings.
Free Zones? Irina Heaver clarified that they are also currently subject to applicable corporate taxation laws, with some certain exemptions.
Irina Heaver shared that personal income tax and capital gains tax is also applied. Yes, that’s 0%. However, that does not actually mean you’re “off the hook” if you’re conducting business under certain trade licenses.
As noted by Irina Heaver, the bottom line is that tax laws tend to be complicated in the UAE as well as other jurisdictions. Therefore, we should not rely on random updates. While this may be true, it is still evident that MENA region countries like the UAE are trying their best to support innovations in the Fintech, crypto, and fast-growing Web3 ecosystems.
Although some have criticized the region for not adhering to stricter regulatory guidelines like those adopted in the UK, Europe, and the US, it’s worth pointing out that the typical investor and business owner in the UAE has a different profile than those of other jurisdictions. Each country’s regulators usually try to introduce policies that are specific and more suited to a particular region, instead of simply copying the laws of other markets. This also makes sense considering that the UAE has been attracting substantially more business deals in the past few years when compared to Europe and other Western nations.