Clarification on VAT Implications for Cryptocurrency Mining in the UAE

On January 14, 2025, the UAE Federal Tax Authority (FTA) issued a crucial public clarification regarding the VAT treatment of cryptocurrency mining. This clarification differentiates between Crypto currency mining by a person for his own account and Mining crypto currency on behalf of another person, outlining their respective VAT obligations.

Crypto currency Mining for Own Account

A person undertaking mining activities for his own account, contributes his computational power to the network and does not contribute such computational power to any identifiable recipient . As such, mining for one’s own account is not considered a taxable supply under VAT law, and the rewards received are not considered as consideration, and would fall outside the scope of VAT.

Crypto currency Mining on Behalf of Another

A person mining cryptocurrency on behalf of another person for a fee is considered to make a supply of services. If the service is supplied by a taxable person to a customer in the UAE, the supply of services will be subject to the standard rate of 5%. However, the supply may be zero-rated if it is made to a non-resident and all the requirements for zero rating under Article 31 of Cabinet Decision No. 52 of 2017 on the Executive Regulation of Federal Decree-Law No. 8 of 2017 on Value Added Tax, and its amendments, (“Executive Regulation”) are met.

Recovery of Input Tax

• Crypto currency Mining for Own Account: Input tax on mining-related expenses (hardware, utilities, etc.) for mining of its own account is not recoverable since the activity is not considered a taxable supply.
• Crypto currency Mining on Behalf of Another: Input tax on mining-related expenses (hardware, utilities, etc.)  incurred for mining on behalf of another can be recovered, as it is linked to a taxable supply.

The FTA’s clarification helps clarify the VAT treatment for those involved in cryptocurrency mining. VAT compliance is necessary for businesses and individuals mining on behalf of others, and input tax recovery is possible.

If you’re engaged in cryptocurrency mining and want to ensure your operations comply with UAE VAT regulations, AMCA is here to assist.

Contact AMCA today for a free 30-minute consultation to understand the clarification in detail, discuss your cryptocurrency mining activities, and ensure you fully comply with VAT laws.

Reach out now to secure your consultation!

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