A. SREENIVASA REDDY (ABU DHABI)
The UAE Federal Tax Authority (FTA) has set out a mechanism for converting the value of transactions involving digital currencies into UAE dirhams for value-added tax (VAT) reporting.
Taxable persons supplying digital currencies or receiving payment in digital currency for goods or services must apply the method when reporting the transactions in their tax returns, the FTA said in a directive.
Under the mechanism, each taxable person must select three exchanges from an approved list of centralised public digital-currency trading platforms published by the FTA.
The same three platforms must be used for all relevant transactions undertaken by that taxable person during the same calendar year, the directive said.
For each transaction, the taxable person must calculate the numerical average of the digital currency’s exchange rates published by the three selected platforms.
The rates prevailing at the date and time of the supply must be used. Where applicable, the rates at the date and time the payment is received should be used instead.
The resulting average exchange rate will then be used to convert the value of the digital currency into UAE dirhams for disclosure in the VAT return.
The approved list accompanying the directive names five exchanges: Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget and Payward FZCO.
Taxable persons may select any three of the five platforms but must continue using their selected exchanges throughout the relevant calendar year.
The directive also requires businesses to retain records substantiating the exchange rates obtained from each of the three platforms, in addition to meeting other record-keeping requirements related to the supply.
The FTA said it would issue a public clarification setting out the procedure to be followed when the exchange rate for a particular digital currency is not available on three platforms from its approved list.
The rules were issued under Directive on Tax Transactions No. 3 of 2026.