With cryptocurrencies on the rise, especially after the recent US presidential elections, the question of the tax treatment of cryptocurrencies is brought to the fore. Today, let’s have a look at crypto mining since the UAE is recognised as a preferred choice for miners. 

Mining and VAT

Recently, the UAE Federal Tax Authority (FTA) has clarified that mining for personal accounts is not subject to value-added tax (VAT). Conversely, cryptocurrency mining conducted on behalf of another party for a fee is considered a taxable supply of services and is subject to a 5% VAT. Moreover, if the services are provided to a non-resident, they may be zero-rated under and subject to the UAE VAT Executive Regulations. Plus, the miners performing such services would be able to recover input VAT on related expenses, such as utilities and internet services.

Mining and CIT

However, as to the corporate income tax (CIT), it is unclear whether cryptocurrency mining for personal accounts constitutes a business activity subject to CIT or is regarded as a personal investment income outside the scope of business taxation. When mining is conducted on behalf of another person for a fee, such fees are taxable income. As the regulatory environment evolves, we will see further clarifications as to the tax issues in relation to cryptocurrencies and we will keep you posted. 

Are you looking for more information regarding cryptocurrency taxation in the UAE and require expert guidance? With over 20 years of international experience, we provide you with the bespoke service to suit your specific needs. Contact us via phone at (+971521521330) or email us at office@alphaprimedwc.ae.