The Middle East is one of the fastest growing crypto markets in the world, with the UAE’s share in the global market it has increased by 500 per cent between July 2020 and June 2021.
The UAE is also considered one of the most progressive use cases for crypto. Mass use cases we have seen for crypto in the UAE include airlines and real estate firms, some of which are now accepting payments in crypto. It is evident that the UAE has been creating an encouraging environment for the growth of its crypto industry, especially with Dubai’s enactment of VARA, and while the industry was largely unregulated a few years ago, recent legislative measures have shown the government’s keenness to reduce the potential financial crime risk in the nascent industry.
Some of the key drivers of growth for crypto adoption in the UAE include friendly regulatory regime, government support, increase in private wealth and comparatively high consumer trust.
How Crypto industry grows in UAE
While we are witnessing a boom in the industry, we recognize that crypto is still an emerging market and global regulation is at an evolving stage. Overall, many are adopting a more cautious approach with countries like the US and the UK having announced moves to bring regulatory oversight to the industry, while encouraging market development. The level of oversight on crypto today varies greatly from one country to another, with some regulators like the EU, taking the lead with MiCA (Markets in Crypto Assets), and others still grappling with the regulatory challenges of this new financial instrument.
The growth of the crypto market and its movement correlation with stock markets, coupled with the varied and fragmented regulations across the globe, implies a serious risk to the stability of the overall financial markets. Hence, the need for a strong international framework to regulate the crypto industry and prevent regulatory arbitrage. Governments today want to foster innovation and market growth; but they are also cautious about the potential misuse of crypto for sanctions evasion, fraud, terror financing and money laundering. Facilitative crypto regulation should have appropriate space for innovation and healthy competition while clamping down on illicit conduct.
VAT Registration for your Cryptocurrency Business
Registering for a value-added tax (VAT) for your cryptocurrency business in Dubai is a simple process that can be completed online. The first step is to create an account with the Federal Tax Authority (FTA). Once you have created an account, you will need to provide basic information about your business, including your contact details and the nature of your business activities. After you have provided this information, you will be able to submit your application for VAT registration in UAE. The FTA will then review your application and, if approved, will provide you with a VAT registration number. This number must be displayed on all invoices issued by your business.
Documents Required for VAT Registration in UAE
1. Trade License:
Issued by the Department of Economic Development (DED), a trade license is a mandatory requirement for businesses operating in the UAE. The trade license must be obtained before commencing business operations in the UAE.
2. Certificate of incorporation:
This document is issued by the relevant authorities in the country of incorporation and is required to be submitted along with the trade license.
3. Memorandum and Articles of Association:
These documents are required to be submitted along with the certificate of incorporation.
4. Passport copies of all partners:
Clear copies of the passport pages containing the personal details and passport photographs of all partners are required to be submitted.
5. Visa copies of all partners:
Clear copies of the visa pages containing the personal details and visa photographs of all partners are required to be submitted.
6. DCCI registration certificate:
All businesses registered with Dubai Chamber of Commerce and Industry (DCCI) are required to submit a copy of their registration certificate.
7. Federal Tax Authority (FTA) application form:
The FTA application form must be completed and submitted along with all the supporting documents.
Penalties for Non-Registration of VAT in UAE
If you are found to be operating your business without registering for VAT in the UAE, you will be subject to a number of penalties. These can include a fine of up to AED 10,000. In addition, your business will be required to register for VAT and pay any outstanding tax liabilities. If you fail to do so, you will be subject to additional penalties.
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