The post UAE Tax authority to levy VAT from Crypto mining service providers appeared on BitcoinEthereumNews.com.

The Federal Tax Authority (FTA) of the United Arab Emirates (UAE) issued a clarification regarding VAT (Value Added Tax) for those dealing in cryptocurrency mining. As per the clarification, individuals who are crypto mining for themselves will not incur a VAT tax; however, if they are mining for others offering it as a service, they will need to pay VAT. The UAE VAT tax rate is 5%. The Federal Tax Authority define Cryptocurrency Mining as “the process where specialized computers, also known as mining rigs, validate blockchain transactions for a specific cryptocurrency, for which a reward may be received for the contribution of computational power.” Input tax is non-recoverable for Individual crypto miners When it comes to Input Tax Recovery Guidelines, the FTA has clarified the recovery of input tax related to mining activities, both for personal and third-party mining. In terms of personal crypto mining, input tax on expenses like hardware purchases, real estate rental, or utility bills is non-recoverable as these costs are not tied to taxable supplies. Input tax is a tax that is added to goods and services that a business buys to make its own goods or provide its own services: As for Third-Party crypto mining services, registered miners providing services to others may recover input tax to the extent that it is incurred for taxable activities. Proper documentation, such as tax invoices, is required for this recovery. Personal crypto mining is exempted from VAT In terms of VAT, mining cryptocurrency by a person for their own account is not considered a taxable supply and, therefore, falls outside the scope of VAT. The Federal Tax Authority noted, “Cryptocurrency mining by a person for his own account is not a taxable supply and falls outside the scope of VAT. Mining cryptocurrency on behalf of another person,…

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Filed under: News - @ January 16, 2025 11:18 am