The UAE’s Federal Tax Authority (FTA) has introduced a new framework for businesses that deal with digital currencies and VAT. For a long time, businesses conducting a taxable transaction involving cryptocurrency would simply report the crypto amount in their VAT return.

However, now with the new tax framework, businesses are required to convert the value of that digital currency into UAE dirhams (AED). The main purpose of this is to ensure that the transaction can properly be disclosed for VAT purposes.

Issued by the FTA, there is a three-step conversion mechanism to determine the dirham value contained in the Directive on Tax Transactions No. 3 of 2026.

The three main rules under the new framework

First, businesses must select…