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On 14 January 2025, the UAE Tax Authority issued a clarification on the application of VAT to cryptocurrency mining.
Key points:
- Mining for yourself: If a company mines cryptocurrency for its own needs, the resulting cryptocurrency is not subject to VAT. This is because the calculations are for the benefit of the entire blockchain, not specific users. The cryptocurrency goes to the one who correctly calculated the block hash first.
- Mining for others: If a company mines cryptocurrency for its own needs, the resulting cryptocurrency is also not subject to VAT (for the same reasons as in the first case). Important: As part of mining services, companies can deduct VAT paid to suppliers (input VAT). This applies to the extent that the goods/services purchased by the miner are related to mining.
- Purchase of mining services: The purchase of mining services in the UAE is subject to VAT. If the services are provided by foreign miners, the tax is paid either by the buyer (if he is registered for VAT) or by the miner. There are legal ways to reduce VAT when purchasing miner services in the UAE.
"The UAE Tax Authority has clarified the tax rules for UAE-registered companies engaged in cryptocurrency mining. In addition, the new clarification follows recent changes to UAE tax rules, which exempt cryptocurrency transactions from VAT."
By contacting us, you will receive:
Advice on tax regulation of cryptocurrency mining in the UAE.
Analysis of tax risks and strategies for minimizing VAT when purchasing mining services.
Support for the process of registering a company in the UAE for cryptocurrency mining activities and obtaining the appropriate license.
Support in processing tax deductions for incoming VAT.
Development of compliance solutions to comply with local legislation and prevent sanctions.
