The UAE Federal Tax Authority (FTA) has announced changes to the implementation provisions of Federal Decree No. 8 of 2017 governing Value Added Tax (VAT).
The changes, which will come into effect from November 15 in accordance with Cabinet Decision No. (100) of 2024, introduce VAT exemption for the transfer and conversion of virtual assets, including #cryptocurrencies .
Individuals and entities involved in #cryptocurrency transactions will be exempted from VAT obligations in these processes. In addition, Article 30 relaxes the conditions necessary for the application of the zero tax rate and addresses the taxation of VAT on the export of goods. Exporters will be able to submit various types of documentation, such as customs declarations and transportation certificates, instead of the previous strict requirements.
These changes are in line with the Excise Law, especially with regard to the excise duty exemption for goods exported from the UAE. Article 31 changes the VAT rules for exported services, as exported services should not be considered as performed in the UAE or in certain territories specified in the Decree Law. This change effectively limits the application of the zero rate of VAT on exported services by classifying certain services as standard services if the place of supply is in the UAE. This could affect real estate, electronic services and telecommunications.
The most significant change is contained in Article 42 on the taxation of financial services. This amendment adds, inter alia, VAT exemption for the management of investment funds, the transfer of ownership of virtual assets and the conversion of these assets. The latter two processes are now expressly exempt from VAT with retrospective effect from January 1, 2018.
fund managers who manage investments need to assess whether their services fall under this VAT exemption: if they manage a UAE-authorized investment fund, their services related to fund management, investment and performance monitoring are exempt from VAT.
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