The United Arab Emirates has introduced a standardized method for businesses to convert digital-currency payments into UAE dirhams when reporting transactions for value-added tax, adding a formal valuation framework to the country's growing digital-asset economy.

The Federal Tax Authority (FTA) issued Directive on Tax Transactions No. 3 of 2026, which sets out the conversion methodology for taxable persons supplying digital currencies or providing goods and services for which payment is received in digital currency. Coin Bureau highlighted the development, noting that companies must convert crypto values into dirhams for disclosure in their VAT returns.

The directive is the latest step in the UAE's broader effort to build a comprehensive regulatory framework for digital assets, which includes the federal-level rulebook issued in 2024 by the Securities and Commodities Authority and sectoral oversight from regulators such as the Central Bank of the UAE and Dubai's Virtual Assets Regulatory Authority. Taxable persons in the UAE have generally been subject to the standard 5% VAT regime, and the new directive addresses the practical problem of how to value volatile crypto-denominated payments under that regime.

UAE VAT Rules Require Three Exchange Rates

Under the directive, businesses must select three centralized public digital-currency exchange platforms from a list published by the FTA. The same three platforms must then be used for all transactions throughout the relevant calendar year.

For each transaction, companies are required to determine the exchange rates prevailing at the date and time of the supply, or when the digital-currency consideration is received, as applicable. The three rates are then used to calculate a numerical average, which determines the UAE-dirham value reported for VAT purposes.

The FTA's approved list includes Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget, and Payward FZCO — several of which operate from UAE free zones that have become hubs for licensed crypto businesses. Businesses therefore have flexibility in selecting their three platforms, but the requirement to maintain the same selection during the calendar year adds a consistency requirement to their tax-accounting processes.

Record-Keeping Becomes a Key Compliance Requirement

The directive also requires businesses to retain records showing the exchange rates obtained from each of the three selected platforms. These records supplement existing VAT documentation requirements and provide an audit trail for the dirham values reported to the tax authority.

The framework is significant for companies using digital assets in ordinary commercial transactions because cryptocurrency prices can differ across exchanges and change rapidly. Using an average of three approved platforms establishes a consistent valuation methodology rather than leaving businesses to determine taxable values independently.

The FTA has also indicated that further clarification will address situations in which a rate for a particular digital currency is unavailable on the three approved platforms. That guidance will be an important next step for businesses handling less-liquid digital assets.

Source: Hokanews