The United Arab Emirates (UAE) has exempted all %Cryptocurrency transactions from its value-added tax (VAT), bringing the industry into line with more traditional financial services.
The tax exemption, which goes into effect on Nov. 15 of this year, applies retroactively to transactions from as far back as Jan. 1, 2018.
The exemption makes clear for the first time that the tax doesn’t apply to digital coins and tokens.
It covers the exchange of and transfer of ownership of any digital assets, including non-fungible tokens (NFTs), often referred to as digital art.
The exemption means that all cryptocurrency transfers and conversions are free from paying the 5% tax.
Analysts say that with the tax exemption, the UAE is classifying digital assets the same as traditional financial services.
Some analysts are also saying that this tax exemption is the latest step by the UAE to establish itself as a crypto friendly jurisdiction and attract crypto-related businesses.
Many cryptocurrency firms and leaders in the sector have domiciled themselves in the United Arab Emirates because of its friendly tax treatment and lack of regulations on the industry.