UAE Ties VAT Value of Crypto Payments to Three Exchange Rates

The Federal Tax Authority has issued Directive on Tax Transactions No. 3 of 2026, a new instruction for converting digital currency transactions into UAE dirhams on VAT returns. It applies to taxable persons supplying digital currencies and to businesses supplying goods or services that are paid for in digital currency. The underlying VAT charge stays where it was: taxable supplies paid in digital currency remain subject to the standard 5% rate.

For each affected business, the rule begins with a selection. The business must choose three centralized public digital currency exchange platforms from a list the FTA has published. Once chosen, those three platforms are fixed for all applicable transactions during the calendar year. The choice is not something a business can revisit transaction by transaction. At the date and time of supply, or at the date and time of payment, the business must obtain exchange rates from each of the three platforms. The value of the transaction in UAE dirhams is the numerical average of the three rates.

The record-keeping burden comes next. Businesses must retain documents that support the exchange rates obtained from each platform, since those records form the basis for the dirham figure reported to the authority. The FTA's approved list includes Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget and Payward FZCO. For digital currencies whose exchange rates are unavailable on three approved platforms, the FTA will issue a separate public clarification.

The UAE introduced VAT in January 2018. Since then, the treatment of cryptocurrency has been a continuing question for tax authorities. The scale of the issue is visible in Chainalysis's 2025 Geography of Cryptocurrency Report, which says the UAE received more than US$56 billion in cryptocurrency in the 2024-25 reporting period. That figure represented year-on-year growth of 33%. The report also recorded a rise of 88.1% in cryptocurrency transactions under US$1,000 in the UAE, and a rise of 83.6% in large retail cryptocurrency transactions.

The Central Bank of the UAE is pursuing a parallel project with the Digital Dirham. The bank is developing the currency for retail, wholesale and cross-border payments. Its 2025 Annual Report states that a Digital Dirham wallet has been developed to support retail and wholesale use cases, and the first live government transaction using the Digital Dirham was completed in 2025.

The averaging method changes what accepting crypto means for accounting departments. Payment value is fixed by reference to three named exchanges at a defined moment, and the selection of those exchanges happens once a year. That gives the FTA an audit trail that does not rely on the merchant's later judgment. It also leaves less liquid tokens in a practical gray area until the promised clarification appears.