UAE Issues New VAT Rules for Cryptocurrency Payments

The UAE’s Federal Tax Authority (FTA) has issued a new directive outlining how businesses must convert digital currency transactions into UAE dirhams when filing Value Added Tax (VAT) returns.

Directive on Tax Transactions No. 3 of 2026 applies to taxable persons supplying digital currencies, as well as businesses supplying goods or services for which payment is received in digital currency.

Under the directive, businesses must select three centralized public digital currency exchange platforms from a list published by the FTA and use the same three platforms for all applicable transactions during the calendar year.

For each transaction, businesses must obtain the exchange rate for the relevant digital currency from each of the three selected platforms at the applicable date and time of the supply or receipt of payment. The numerical average of the three rates must then be used to convert the transaction value into UAE dirhams for VAT reporting purposes.

The FTA’s current list of approved platforms includes Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget, and Payward FZCO.

Businesses are also required to retain records supporting the exchange rates obtained from each of the three platforms, alongside their existing record-keeping obligations for the relevant supply.

The standard UAE VAT rate remains 5% for taxable supplies, including when payment for those supplies is received in digital currency. The UAE introduced VAT in January 2018.

The FTA said it will issue a separate public clarification outlining the procedure for digital currencies whose exchange rates are not available on three platforms included on its published list.

The directive comes amid growing digital-asset activity in the UAE. According to Chainalysis’ 2025 Geography of Cryptocurrency Report, the UAE received more than US$56 billion in cryptocurrency value during the 2024-25 reporting period, representing 33% year-on-year growth. Transactions valued below US$1,000 increased 88.1%, while large retail transactions rose 83.6%.

Separately, the Central Bank of the UAE has been developing the Digital Dirham for retail, wholesale, and cross-border payments. According to its 2025 Annual Report, a Digital Dirham wallet was developed to support retail and wholesale use cases, while the first live government transaction using the Digital Dirham was completed in 2025.

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