Are you looking for a place to optimize your taxes on crypto gains? Or, maybe you live in Dubai and want to know if you’ll have to pay any taxes on your gains? In this article we’ll discuss the Dubai crypto tax and explain everything you need to know.
Is Crypto Taxed in Dubai?
Crypto is not taxed in Dubai. At least not in the hands of private individuals.
This applies both for capital gains as for income from mining or staking. Even if you’re an active trader your income will remain tax free.
The situation is a bit different for companies though. As the United Arab Emirates introduced a corporate tax of 9% this can also apply to companies in Dubai. We’ll discuss this more into detail in the next sections.
How Taxes Work in Dubai
We can divide taxes in three categories. There is personal income tax, corporate income tax and value added tax. We’ll have a look at each of these.
Personal Income Tax on Cryptocurrencies in Dubai
There are no personal income taxes in the UAE and thus also not in Dubai.
Therefore, any income you make on a personal level is tax free. This applies to active income from trading cryptocurrencies, as well as on capital gains from more passive investments.
So, the conclusion is that there are no personal income taxes on cryptocurrencies in Dubai.
UAE Corporate Income Tax for Crypto Gains
For a long time, the UAE also didn’t have any corporate income taxes. However, this changed in 2023.
Since then, companies need to pay a corporate income tax of 9% on profit over AED 375.000 (~€95.000).
Yet, you still have the possibility to incorporate a company in one of the free zones. If you meet certain requirements, businesses in the free zone are still exempted from paying corporate tax on their profit. However, there is some compliance and regulation involved which makes this mostly an option for businesses with a certain scale.
Value Added Tax on Cryptos
VAT on cryptocurrencies is somewhat of a complicated topic.
Many countries levy VAT or sales tax on the sale of goods or services. However, there are exemptions to this principle. Most of the time, the sale of financial instruments are exempted from such tax.
In the UAE, a general VAT rate of 5% applies. In the past, this rate also applied to transactions for cryptocurrencies. The reason was that no specific exemption was provided in this respect. However, because cryptocurrencies are de facto used as financial assets, this was a bit counterintuitive.
Accordingly, the UAE authorities decided to get rid of VAT on transactions with cryptocurrencies as from 24 November 2024. And, the change will have effect retroactively for all transactions since 1 January 2018. This was the date the UAE introduced their value added tax.
Key Concepts about Capital Gains and Trading Cryptocurrencies in Dubai
In order to have a good understanding about taxes on cryptos in Dubai you need to understand a few key concepts.
Tax Residency in Dubai
The first concept is tax residency in Dubai.
Dubai is one of the emirates of the United Arab Emirates so when we are discussing tax residency in Dubai we’re actually discussing tax residency in the UAE as the rules are the same all over the country.
The UAE has various ways in which you can qualify as a tax resident:
- Have your primary residence and centre of your financial and personal interests in the UAE;
- Spend at least 90 days in the UAE during twelve consecutive months while being a UAE national (or of any of the other member states of the Gulf Cooperation Council) or holding a residence permit and while also having a permanent residence in the UAE or carrying on employment/business there;
- Spend at least 183 days in the UAE during twelve consecutive months.
Yet, only in the last case you’ll be able to apply for an international tax residency certificate. This is basically proof that you are a tax resident of the UAE. You might need this document to prove to other countries (e.g. your former home country) you are a tax resident in the UAE now.
Check out the article about tax residency in Dubai if you want to learn more about it.
Capital Gains
For tax purposes, most countries distinguish between taxes on professional income on the one hand and taxes on investment income on the other hand.
Capital gains fall in that category of investment income, together with dividends for example.
We speak about a capital gain when you buy an asset (e.g. Bitcoin) at a certain price and later on sell it at a higher price. The difference is the capital gain you make.
Many countries will tax this capital gain. However, as we discussed before, Dubai doesn’t have any personal income taxes and thus there will be no tax. This can be different for companies though. Also here, I refer what we discussed in the previous sections of the article.
Regulatory Framework
Dubai also has an extensive regulatory framework for cryptocurrencies and virtual assets.
First of all, there is the Dubai Financial Service Authority (DFSA) who oversees the financial industry in general. Even more specifically, there is also the Virtual Asset Regulatory Authority (VARA) which regulates providers active in the virtual asset space.
Furthermore, there are also the UAE Central Bank and the Securities and Commodities Authority who are involved in regulating and controlling cryptocurrencies.
Should you Move to Dubai to Save on Crypto Taxes?
As we discussed, Dubai offers great tax incentives if you operate in the world of cryptocurrencies.
The absence of personal income taxes makes it a great place for private investors in this space.
For companies the situation is a bit more complicated. But also in this case many tax incentives exist which can benefit you.
Yet, whether Dubai is the right place for you, depends on a variety of factors. One of these is that you will need to spend six months per year in the UAE to be considered a tax resident.
You can also have a look at my article where I gave an overview of other crypto tax free countries.
The Smartest Way to Avoid Issues and Retain your Gains
If you want to know what the smartest way to avoid issues and retain your crypto gains is, then you can reach out to me!
I have helped hundreds of nomads with finding the right structure to enable them to live their life to the fullest. Each individuals situation is different. Therefore, it’s important that you get expert advice tailored to your personal situation. For one person Dubai might be a great place, while it might not be ideal for another.
