The UAE’s Federal Tax Authority (FTA) has introduced new rules governing how businesses must value digital currencies when reporting transactions in their Value Added Tax (VAT) returns.
Directive on Tax Transactions No. 3 of 2026 applies to taxable businesses that supply digital currencies or provide goods and services in exchange for payment made in digital currency. Under the directive, companies must convert the value of digital currency into UAE dirhams when declaring the transaction in their VAT returns.
The new system comes as the UAE experiences growing adoption of digital assets, with cryptocurrencies increasingly being used for payments and commercial transactions rather than only for investment and trading.
The FTA has established a three-step process for determining the value of digital currency. Businesses must first select three exchange platforms from the authority’s approved list of centralised public digital currency exchanges. The same three platforms must be used consistently for transactions conducted throughout the same calendar year.
Businesses must then determine the exchange rate for the relevant digital currency on each of the three selected platforms. The rates must correspond to the date and time when the supply took place or when payment was received, depending on which event applies to the transaction.
The exchange rates from the three platforms are then averaged numerically. Businesses must use this average rate to convert the digital currency value into UAE dirhams for VAT reporting.
Companies are also required to maintain records showing the exchange rates obtained from each of the three platforms. These records must be retained alongside existing documentation required for the underlying taxable supply.
The FTA said it plans to publish additional guidance for situations where an exchange rate for a particular digital currency is not available on three platforms included on its approved list.
The authority’s current list contains five exchanges: Binance, Bybit Fintech, Deribit, Bitget and Payward.
The directive arrives as digital-asset activity continues to expand across the UAE. Chainalysis reported that the country received more than $56 billion in cryptocurrency value during its 2024-25 reporting period, representing annual growth of 33 per cent. Transactions worth less than $1,000 increased by 88.1 per cent, while large retail transactions rose by 83.6 per cent.
The Central Bank of the UAE is also developing the Digital Dirham for retail, wholesale and cross-border payments. Its 2025 Annual Report said a Digital Dirham wallet had been developed, while the first live government transaction using the digital currency was completed in 2025.
The UAE introduced its 5 per cent VAT rate in January 2018 under the GCC-wide VAT framework.
