UAE sets out how crypto payments must be converted to dirhams for VAT

Businesses in the UAE that accept cryptocurrency payments for goods or services now have a prescribed method for reporting those transactions for VAT. The Federal Tax Authority’s Directive on Tax Transactions No. 3 of 2026 applies both to digital-currency supplies and to goods or services paid for in digital currency.

For tax-return purposes, companies must convert the cryptocurrency’s value into UAE dirhams through a three-step process. They must first choose three centralized public digital-currency exchange platforms from a list published by the authority. The same three platforms must be used consistently for transactions carried out during the calendar year.

Businesses must then calculate the numerical average of the exchange rates published by those platforms. The relevant rates are those prevailing when the supply took place or when payment was received, as applicable. The resulting average determines the dirham value reported in the VAT return.

The directive also adds record-keeping requirements. Businesses must retain evidence of the exchange rates obtained from each of the three platforms, alongside their existing records for the supply. The authority said it would issue a separate public clarification for cases in which a cryptocurrency’s rate cannot be found on three platforms on its published list.

The rules arrive as cryptocurrency activity in the UAE moves beyond speculative trading toward payments and commercial use. Chainalysis reported more than $56 billion in cryptocurrency value received in the UAE during its 2024-25 reporting period, a 33% year-on-year increase. Transactions below $1,000 rose 88.1%, while large retail transactions increased 83.6%.

The Central Bank of the UAE is also developing the Digital Dirham for retail, wholesale and cross-border payments. Its 2025 annual report said a wallet had been developed for retail and wholesale uses, and that the first live government transaction using the currency took place in 2025. The UAE introduced its 5% VAT rate in January 2018 under the Gulf-wide framework.