The UAE Federal Tax Authority issued Directive No. 3 of 2026 in mid-July, establishing a mandatory framework for converting cryptocurrency payments into dirhams for VAT reporting purposes. Businesses must now select three approved exchange platforms from a list that includes Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget, and Payward FZCO, and use the arithmetic average of their rates at the precise timestamp of each transaction to determine taxable value. The standard 5% VAT rate in place since 2018 remains unchanged for taxable goods and services paid in cryptocurrency. Companies are required to maintain timestamped records of all exchange rates used, and this conversion methodology cannot be changed mid-year. The FTA is expected to issue further guidance on illiquid digital assets that are not listed on the approved platforms.
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