Published: July 2026

The UAE Federal Tax Authority (FTA) has issued Directive on Tax Transactions No. 3 of 2026 on the method of converting the value of digital currencies into UAE Dirham (AED) for Value Added Tax (VAT) purposes. Issued on July 14, 2026, the Directive introduces a standardized, auditable mechanism for taxpayers dealing in digital currencies to determine the AED value to be disclosed in their VAT returns.

Who Is Affected

The Directive applies to any taxable person who makes a supply of digital currency, or a supply of goods or services for which the consideration is received in the form of digital currency. Such persons must convert the value of the digital currency into AED for disclosure in their VAT returns.

The Conversion Mechanism

Taxpayers must convert the value of the digital currency into AED as follows:

• Select three exchange platforms from the FTA’s published list of centralized, public digital currency exchanges, and use the same three platforms for all transactions during the same calendar year.
• Calculate the numerical average of the exchange rates across the three platforms, using the rate prevailing at either the date and time of supply or the date and time the consideration is received, as applicable.
• Convert the value into AED using that numerical average.

Record-Keeping Requirements

Taxpayers must retain records that evidence the exchange rates obtained from each of the three selected platforms, in addition to other record-keeping obligations relating to the supply. Robust documentation will be essential to support the AED values disclosed and withstand FTA scrutiny including time stamp validation.

FTA-Listed Exchange Platforms

For the purposes of the Directive, the FTA has published the following list of centralized, public digital currency exchange platforms in the UAE:

• Binance FZE
• Bybit Fintech FZE
• Deribit FZE
• Bitget
• Payward FZCO

The Directive also indicates that the FTA will issue a clarification specifying the procedure to follow when a rate for the relevant digital currency is unavailable on three of the listed platforms.

A&M Comments

The Directive brings welcome certainty to a previously unaddressed area of UAE VAT compliance. Businesses transacting in digital currencies should act now to: (i) select and document the three exchange platforms they will use for the calendar year; (ii) establish a process, preferably automated for high-volume businesses, to capture exchange rates at the correct date and time for each transaction; and (iii) maintain supporting records that evidence the AED values disclosed in their VAT returns.

How A&M Can Help

Our Middle East Indirect Tax team can help you assess the impact of the Directive, design a compliant conversion and record-keeping process using low-code automation, and engage with the FTA where required. Please reach out to your usual A&M contact to discuss how these changes affect your business.

This alert is provided for general information only and does not constitute professional advice. You should not act upon the information contained herein without obtaining specific professional advice.