UAE Sets New VAT Rules for Crypto Payments and Dirham Conversion
The UAE Federal Tax Authority (FTA) has introduced a new method for determining the UAE dirham value of digital-currency transactions for Value Added Tax (VAT) reporting.
Under Directive on Tax Transactions No. 3 of 2026, businesses that supply digital currencies or accept digital currencies as payment for goods and services must convert the value of those transactions into UAE dirhams when reporting them in their VAT returns. The directive was issued in July 2026.
The new framework gives businesses a standard way to establish the dirham value of a crypto transaction instead of relying on an exchange rate chosen independently by the taxpayer.
The FTA requires a taxable business to select three cryptocurrency exchanges from its approved list of centralised public digital-currency platforms.
The business must use the same three exchanges for all relevant transactions during that calendar year.
For each transaction, the exchange rates published by the three selected platforms are used to calculate a numerical average. That average rate is then used to convert the digital-currency value into UAE dirhams for VAT reporting.
The relevant exchange rates are those prevailing at the applicable date and time of the supply or, where relevant, receipt of the consideration.
This means a company cannot simply select whichever crypto exchange gives it the most favorable valuation for an individual transaction.
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Five Exchanges Approved by the FTA
The FTA has published five centralised public digital-currency exchanges that can be used under the directive.
They are:
Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget and Payward FZCO.
Businesses must choose three from this approved list and maintain that selection throughout the relevant calendar year.
Businesses Must Keep Exchange-Rate Records
The new requirement also places a record-keeping obligation on taxable businesses.
Companies must retain evidence of the exchange rates obtained from each of their three selected platforms, alongside their existing records relating to the underlying supply.
That documentation provides evidence of how the business arrived at the dirham value reported for VAT purposes.
The FTA has also indicated that it will issue a public clarification covering situations where a digital currency does not have an available exchange rate on three of the approved platforms.
What the Rule Means for Crypto Payments
The directive does not create a separate VAT rate for cryptocurrency. Instead, it establishes how the value of a digital-currency transaction must be determined in UAE dirhams for VAT reporting.
For example, if a UAE business accepts cryptocurrency as payment for a taxable supply, the business cannot leave the transaction valued only in crypto. It must determine its AED value using the prescribed methodology and report the transaction accordingly.
The same requirement applies to taxable persons making supplies of digital currency themselves.
The change is particularly relevant to businesses that accept digital assets from customers, sell digital currencies or otherwise conduct taxable transactions involving crypto.
Why the UAE Introduced the Method
Cryptocurrency prices can differ between exchanges and can move rapidly within a short period. Without a defined valuation method, different businesses could potentially use different rates to determine the value of the same digital asset.
The FTA’s new framework creates a more consistent and auditable approach.
By requiring three approved exchanges and an average of their rates, the authority has established a common basis for determining the AED value used in VAT reporting.
For businesses, the immediate priority is to ensure that their accounting and VAT systems can record the relevant exchange rates, calculate the required average and retain supporting evidence.
The directive therefore gives UAE businesses dealing with digital currencies a clearer compliance framework as crypto becomes more integrated into commercial transactions.
Source: “UAE Federal Tax Authority
