Executive Summary
A UAE company that holds crypto records it in its books as an intangible asset under IAS 38 – or as inventory under IAS 2 if selling crypto is its ordinary business. Profit from crypto is taxed like any other profit: 0% on the first AED 375,000 for each tax period and 9% above it. Selling and exchanging crypto has been free of VAT since 1 January 2018.
Cryptocurrency, such as Bitcoin or Ether, is a digital form of value recorded on a blockchain. No state or bank issues it, and it gives the holder no right to demand money from anyone. For this reason accountants treat it neither as cash nor as a financial instrument. The rules below apply to trading and investment companies, crypto service providers and companies that keep part of their funds in crypto.
The accounting rule comes from a June 2019 agenda decision of the IFRS Interpretations Committee, the body that explains how IFRS should be applied. The Federal Tax Authority (FTA) collects corporate tax and VAT on crypto. All figures are as at October 2026.
Who Works With Crypto in the UAE and Why It Reaches the Books
In the UAE, crypto is a licensed line of business, not a grey area: regulators in Dubai and Abu Dhabi license exchanges, brokers and custodians, and every company that holds crypto has to show it in accounts that an auditor checks. Three kinds of companies deal with crypto most often.
- Trading companies that buy and sell crypto on their own account, often alongside other assets.
- Crypto service providers – exchanges, broker-dealers, custodians and asset managers that hold client assets under a licence.
- Holding and operating companies that keep part of their treasury in crypto or received tokens from an investment.
Fewer ordinary businesses take crypto as payment for goods or services than founders often assume. Under the 2024 payment token regulation of the Central Bank of the UAE (CBUAE), a seller on the mainland or in a commercial free zone may in practice accept only a dirham payment token from an issuer licensed by the CBUAE. Bitcoin, Ether and dollar stablecoins fall outside that permission. The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), the two financial free zones with their own regulators, follow their own rules.
The infrastructure around these companies has been built over eight years. The ADGM Financial Services Regulatory Authority (FSRA) launched the region's first crypto asset framework on 25 June 2018. Dubai created the Virtual Assets Regulatory Authority (VARA) by a 2022 law, and the crypto token regime of the Dubai Financial Services Authority (DFSA) came into force in DIFC on 1 November 2022. Tax rules followed: a 2024 Cabinet decision set the VAT treatment of virtual assets, and a 2026 FTA directive named five exchanges whose rates are used to convert crypto into dirhams for VAT. Four of the five operate through UAE entities, for example Binance FZE and Payward FZCO.
As a result, crypto accounting is routine work with known tools. A wallet or an exchange account is kept as a sub-account, just like a bank account. The exchange statement and the on-chain record serve as the primary documents. The price at the reporting date comes from a source fixed in the accounting policy. IFRS has settled how to classify crypto since 2019, and auditors already check crypto balances – at VARA-licensed firms, at least every six months. Crypto differs from other assets in three ways: it trades around the clock, its price swings sharply, and one company may hold it in many wallets. The accounting policy needs a rule for each of them.
How Is Crypto Recognised in a UAE Company's Books Under IFRS?
A company records crypto as inventory if it holds the crypto to sell in its ordinary business. In every other case it records crypto as an intangible asset. IFRS has no special standard for crypto. UAE companies prepare their accounts under IFRS or IFRS for SMEs, so the 2019 agenda decision applies to them directly.
The decision rules out two treatments that companies often try first. Crypto is not cash, because it is not widely accepted as a way to pay. It is not a financial asset either, because it gives no right to receive cash from anyone.
Some tokens do give such a right, for example a stablecoin that the issuer must buy back for dirhams or dollars. The 2019 decision does not cover these tokens. Instead, the company tests them against IFRS 9, the standard on financial instruments. The table shows all four cases.
| Who holds the crypto | Standard | Value at period end | Where changes in value go |
|---|---|---|---|
| A company that holds crypto as an investment or as treasury, or that received it as payment | IAS 38 | The price paid less any impairment, or market value under the revaluation model if the token has an active market | Falls in value go to profit or loss; rises under the revaluation model go to a reserve in equity |
| A company whose ordinary business is buying and selling crypto | IAS 2 | The lower of the price paid and the expected sale price less selling costs | Write-downs go to profit or loss |
| A broker-trader that buys crypto to profit from short-term price moves | IAS 2 | Market value less selling costs | All changes go to profit or loss |
| A company that holds a token giving a contractual right to cash | IFRS 9 | Set by the rules for financial instruments | Depends on how the token is classified under IFRS 9 |
How the Cost Model Works for Crypto in Practice
Most UAE companies that hold crypto use the cost model under IAS 38. The asset stays in the books at the price paid, and a gain above that price appears only when the company sells. Crypto has no end date to its useful life, so the company does not amortise it. Instead, at least once a year and whenever the price falls, the company checks whether the holding is now worth less than its book value. This check is called an impairment test.
For example, a company buys crypto for AED 400,000. At year end the holding is worth AED 300,000, so the company records an impairment loss of AED 100,000 in profit or loss. A year later the price rises to AED 500,000. The company may reverse the loss only up to the original price of AED 400,000. It records the remaining AED 100,000 of growth only when it sells.
The other option is the revaluation model, which lets the company show crypto at market value. It is allowed only if the token has an active market, meaning regular trading in sufficient volume (IAS 38, paragraph 75). A rise in value then goes to a revaluation reserve in equity, not to profit. Thinly traded tokens usually do not meet this test.
Which Price to Use at the Reporting Date
The company values each token at the price on its main market, taken from the same source at the same time every period. Crypto trades around the clock, and prices differ from one exchange to another. The accounting policy should therefore name the exchange or price feed and the time of day, for example the closing price at 23:59 UAE time on the last day of the month. The auditor will check the year-end price against that source.
How Does UAE Corporate Tax Apply to Crypto Gains?
A UAE company pays corporate tax on crypto profit as it does on any other profit: 0% on the first AED 375,000 of taxable income for the tax period and 9% on the part above it. The AED 375,000 band was set by a 2022 Cabinet decision. Taxable income starts from accounting profit, so the IFRS treatment above decides in which year a crypto gain or loss reaches the tax return.
The Realisation Election: Pay Tax Only When You Sell
The realisation election is a choice that lets a company pay tax on a gain when it sells the asset, not when the price rises on paper. It works the same way for losses. Article 20(3) of the 2022 corporate tax law allows it for any company that keeps accrual-based accounts, except banks and insurers.
The company applies the election in one of two ways. It can cover all assets and liabilities that are measured at market value or tested for impairment. Or it can cover all assets and liabilities held for the long term (on capital account). Under the FTA guide on accounting standards and a 2023 Ministerial decision, the company makes the choice in its first tax period, in practice in its first corporate tax return. After that it can withdraw the election only in exceptional circumstances and with FTA approval.
For example, a broker-trader values its crypto at market value less selling costs. It has already used the AED 375,000 band on other profit. It bought crypto for AED 400,000, and at 31 December 2026 the holding is worth AED 520,000, so a gain of AED 120,000 appears in its profit. Without the election the company pays AED 10,800 of tax on that gain in its 2026 return, although it has received no cash. With the election it pays nothing for 2026. If it sells in 2027 for AED 550,000, the whole gain of AED 150,000 is taxed in 2027, at AED 13,500. Losses wait in the same way: an impairment loss reduces taxable income only after the sale.
Free Zone Companies and Individuals
A free zone company does not pay 0% on crypto profit just because of its licence. The 0% rate applies only to a qualifying free zone person – a free zone company that meets every condition of the regime – and only to its qualifying income. Trading crypto on the company's own account is not on the list of qualifying activities in the 2023 Ministerial decision. For a crypto service provider, each activity is checked against that list separately.
The company may earn some non-qualifying income and keep the 0% rate, but only within a small limit called the de minimis threshold: 5% of total revenue or AED 5,000,000, whichever is lower. If it goes over this limit, it loses the regime for the current tax period and the next four, and pays the ordinary 0% and 9% rates on all its profit.
An individual who trades crypto in a personal capacity and without a licence is usually making a personal investment, not running a business, under a 2023 Cabinet decision on natural persons. Corporate tax does not apply to those gains. It applies once the person runs crypto activity as a business with turnover above AED 1,000,000 in a calendar year.
Is VAT Charged on Crypto Transactions in the UAE?
Transferring and exchanging crypto is exempt from VAT, while a fee for keeping or managing crypto wallets is taxed at 5%. A 2024 Cabinet decision changed the VAT Executive Regulation from 15 November 2024. It added a definition of virtual assets and put their transfer and conversion on the list of exempt financial services (Article 42(3)(e)). The FTA public clarification of March 2025 confirms that the exemption also covers past supplies made on or after 1 January 2018. For VAT purposes crypto is not money.
| Supply | VAT treatment | Example |
|---|---|---|
| Transfer of ownership of crypto | Exempt | Selling Bitcoin on an exchange; paying a supplier in crypto |
| Conversion of crypto | Exempt | Exchanging Ether for another token |
| Keeping and managing crypto for a stated fee | 5% VAT | A custody fee of AED 10,000 carries AED 500 of VAT |
| Digital form of a regular currency or of securities | Not a virtual asset | A tokenised dirham follows the rules for money or securities |
The exemption has a cost. Input VAT is the VAT a company pays on its own expenses. The company cannot recover input VAT on costs linked to exempt supplies. A business that has both exempt crypto income and taxable income must therefore split its input VAT between the two and recover only the taxable share. Exempt crypto sales also do not count towards the AED 375,000 threshold for mandatory VAT registration. If a business charged 5% on crypto transfers before the clarification, the FTA suggests that it check whether it should issue tax credit notes.
Which Regulator Licenses a Crypto Business in the UAE?
The regulator depends on the emirate and the zone where the business operates. In Dubai, outside DIFC, it is VARA. VARA covers the Dubai mainland and every Dubai free zone, including DMCC. Its Schedule 1 lists the licensed activities: advisory, broker-dealer, custody, exchange, lending and borrowing, management and investment, and transfer and settlement services.
| Where the business operates | Regulator | Main rulebook |
|---|---|---|
| Dubai mainland and Dubai free zones except DIFC | Virtual Assets Regulatory Authority (VARA) | Virtual Assets and Related Activities Regulations 2023 and VARA rulebooks |
| Abu Dhabi Global Market (ADGM) | Financial Services Regulatory Authority (FSRA) | ADGM financial services rules |
| Dubai International Financial Centre (DIFC) | Dubai Financial Services Authority (DFSA) | DFSA rules on crypto tokens |
| Rest of the UAE mainland | Securities and Commodities Authority (SCA) | SCA 2020 Board decision on crypto assets |
| Payment services using virtual assets, anywhere in the UAE | Central Bank of the UAE (CBUAE) | 2024 Payment Token Services Regulation |
The CBUAE now covers more ground as well: a 2025 federal decree-law on the Central Bank brought payment services using virtual assets under its licensing. According to professional coverage of the law, existing firms had until 16 September 2026 to comply. That date has passed, so a business that pays or settles in crypto should now confirm in writing which licence covers that activity.
What a VARA Licence Adds to the Accounting
A VARA-licensed company must hold reserves equal to 100% of what it owes clients, in the same tokens. It reconciles these reserves every day and has them audited at least every six months. The rule is in Part VI of the VARA Company Rulebook. The reserve audit report goes into the next quarterly report to VARA. The same part requires the company to keep its paid-up capital and net liquid assets above the levels set for its activities, and to tell VARA at once if they fall short.
In the books, this means client crypto and the company's own crypto are kept apart, wallet by wallet, every day. A month-end close is not enough. On each business day the ledger, the exchange and custody statements and the on-chain balances must match, and the company must be able to explain every difference to the auditor.
How to Set Up Crypto Accounting: Step by Step
Common Mistakes and Where Companies Lose Money
- Crypto shown as cash. Under IFRS crypto is not cash or a cash equivalent. The auditor moves it to another line, and bank covenants or compliance tests based on the cash figure can fail.
- Gains above cost booked under the cost model. IAS 38 does not allow this. Profit is overstated, and the company may pay 9% tax on a gain it should not have recorded.
- The realisation election missed. A company that did not make it in its first return pays tax every year on paper gains under IAS 2 – for example, AED 10,800 on a paper gain of AED 120,000.
- 5% VAT on crypto sales, or full input VAT recovery. The first overcharges customers. The second leads to FTA assessments with penalties if the company recovered input VAT linked to exempt supplies.
- Exchange statements accepted without checking. Without on-chain records the company cannot prove what it paid for the crypto or when it sold it, and the FTA may reject the gain calculation.
- A free zone licence taken as a 0% guarantee. Own-account crypto trading is not a qualifying activity. A late corporate tax return costs AED 500 a month for each of the first 12 months.
Bottom Line: Approve the Crypto Accounting Policy
A company whose financial year matches the calendar year should approve its crypto accounting policy before 31 December 2026. The policy names the standard, the price source and the reconciliation routine, so that the 2026 close and audit can rely on it. A company in its first tax period should decide on the realisation election before it files its first return. For 2026 that return is due by 30 September 2027, nine months after the year ends. Our accounting team sets up the ledger structure and monthly reconciliations, and our tax team prepares the corporate tax and VAT positions.
Frequently Asked Questions
Q: Is cryptocurrency taxable in the UAE for companies?
Yes. A UAE company includes crypto profit in its taxable income and pays 0% on the first AED 375,000 and 9% above it for each tax period. A gain is taxed in the year it is recorded under IFRS. If the company made the realisation election in its first return, the gain is taxed when the crypto is sold.
Q: How should a UAE company record Bitcoin in its financial statements?
As an intangible asset under IAS 38, at the price paid less any impairment. If the company sells Bitcoin as its ordinary business, it records Bitcoin as inventory under IAS 2. According to the June 2019 agenda decision of the IFRS Interpretations Committee, Bitcoin is neither cash nor a financial asset.
Q: Is VAT charged on crypto in the UAE?
No VAT is charged on transferring or exchanging crypto. A 2024 Cabinet decision made both exempt, and the FTA confirmed that the exemption covers supplies from 1 January 2018. A stated fee for keeping or managing crypto wallets is taxed at 5%.
Q: Are unrealised crypto gains subject to UAE corporate tax?
Yes, if the company records them in profit or loss and has not made the realisation election. With the election, paper gains and losses stay out of taxable income until the crypto is sold. The election is made in the first tax period and normally cannot be withdrawn.
Q: Do individuals pay tax on crypto in the UAE?
Usually not. An individual who trades crypto in a personal capacity and without a licence is making a personal investment, which is not a business for corporate tax purposes. Corporate tax applies only if the person runs crypto activity as a business with turnover above AED 1,000,000 a year.
Q: Who licenses crypto companies in Dubai?
The Virtual Assets Regulatory Authority (VARA) licenses crypto activities on the Dubai mainland and in all Dubai free zones except DIFC, where the Dubai Financial Services Authority (DFSA) is the regulator. Payment services using virtual assets also fall under the Central Bank of the UAE (CBUAE).
Q: Can a free zone crypto company pay 0% corporate tax?
Only on qualifying income, and own-account crypto trading is not a qualifying activity. Non-qualifying revenue is allowed only up to 5% of total revenue or AED 5,000,000, whichever is lower. Above that limit, the company loses the 0% regime for five tax periods and pays the ordinary 0% and 9% rates.
How CoreLedger Can Help
- We draft the crypto accounting policy: the classification of each token, the price source and the valuation time.
- We build the chart of accounts with a sub-account for each wallet and exchange account.
- We reconcile the ledger with exchange statements and on-chain balances every month, and prepare the reconciliation files that VARA-licensed clients need for their reserve audit.
- We run the year-end impairment test and prepare the supporting schedules for the auditor.
- We prepare the corporate tax return, including the realisation election in the first return, and VAT returns with the input VAT split.
- We handle correspondence with the FTA on crypto questions; licensing is handled by our partner firms.