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Crypto Law/Level VIII · Around the world/8.3 Asia and the Gulf/Lesson 6

The UAE and Dubai’s VARA

Why ‘no income tax’ in the UAE comes with conditions, how VAT on virtual assets was fixed retroactively, what VARA’s enforcement record shows, and how the 2025 Central Bank law reaches DeFi.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. The UAE has no personal income tax, and under Cabinet Decision No. 49 of 2023 personal investment income is left out of the corporate-tax turnover test. Catch: it must be investment for yourself that needs no licence and is not run as a commercial business.
  2. If crypto activity is a business, an individual’s business is subject to corporate tax only when turnover exceeds AED 1 million a year, and taxable income up to AED 375,000 is taxed at 0%. Catch: 9% applies above that.
  3. Transfers, conversions and custody of virtual assets are VAT-exempt under Cabinet Decision No. 100 of 2024, retroactively from 1 January 2018. Catch: exempt businesses may lose recovery of VAT on their own costs.
  4. Use a firm licensed by the right regulator for its zone, such as VARA in Dubai, and check VARA’s enforcement page first. Catch: since 16 September 2025, Federal Decree-Law No. 6 of 2025, Article 62, brings DeFi services under Central Bank licensing.
  5. Moving to the UAE helps only once your home country stops taxing you. Catch: tax residence is a separate test from holding a visa, and exit or citizenship-based taxes can still reach your gains.

MaterialsLesson 3.3.6, on VARA, the free zones and the Central Bank’s Payment Token Services RegulationVARA’s public enforcement pageCabinet Decision No. 49 of 2023, on when an individual’s business becomes subject to corporate taxFederal Decree-Law No. 6 of 2025 on the Central Bank, Article 62, in the Central Bank’s online rulebook

Wonder

  1. Does a UAE resident pay any tax when selling crypto at a profit?
  2. Why did a VAT change in 2024 reach back to 2018?
  3. Does a decentralised protocol need a licence in the UAE?

Explore

  1. Lesson 3.3.6 maps who regulates crypto in the United Arab Emirates: the Virtual Assets Regulatory Authority (VARA) for Dubai outside the Dubai International Financial Centre, the financial free zones with their own regulators, and the Central Bank of the UAE (CBUAE) for payment tokens. This lesson adds tax, enforcement and the latest federal change. The UAE has no personal income tax. But the federal corporate tax, introduced by Federal Decree-Law No. 47 of 2022 for financial years beginning on or after 1 June 2023, charges 9% on taxable income above AED 375,000, and it can reach individuals as well as companies.
  2. The line for individuals is drawn by Cabinet Decision No. 49 of 2023. A natural person’s business or business activity is subject to corporate tax only if its total turnover exceeds AED 1 million in a calendar year. Three kinds of income are left out of that count: wages, personal investment income, and real estate investment income. Personal investment income means investment activity carried on for oneself that does not need a licence and is not conducted as a commercial business. So an individual holding and selling crypto as a private investor is generally outside the tax, while someone running crypto trading, brokerage or mining as a business may cross into it.
  3. Value added tax (VAT) on crypto in the UAE was unclear for crypto until Cabinet Decision No. 100 of 2024, which took effect on 15 November 2024. It defines virtual assets and makes four kinds of supply exempt: transferring ownership of virtual assets, converting them, keeping and managing them and enabling control over them, and arranging those activities, though advice is not covered. The exemption applies retroactively from 1 January 2018. That helps traders who charged VAT, but exempt status can also limit a business’s right to recover VAT on its own costs, so firms had to review returns back to 2018 rather than simply welcome the change.
  4. VARA’s enforcement record shows what it polices most. Its public list from 2024 to 2026 is dominated by cease-and-desist orders and fines for two things: carrying on virtual asset activity without a licence, and breaching its marketing regulations, including promotion to Dubai residents by unlicensed firms. On 13 March 2025 alone it listed actions against ten firms. Even a major project can be caught: on 24 July 2025 VARA listed cease-and-desist orders, financial penalties and a public statement against The Open Network Foundation for breaching the marketing rules. Repeat offenders appear too; Shelbit General Trading was listed in January 2025 and again in July 2026.
  5. The newest federal layer is Federal Decree-Law No. 6 of 2025 on the Central Bank. Article 62, effective 16 September 2025, says that anyone carrying on, offering, issuing or facilitating a licensed financial activity, whatever the technology, falls under the Central Bank’s licensing and supervision. It names virtual asset payment tokens, decentralised finance (DeFi), and platforms, decentralised applications or protocols that enable payments, credit, deposits, exchange, remittances or investment services. Law firm commentary notes that virtual assets held for investment or swapped for other virtual assets fall outside the law. Existing businesses have until 16 September 2026 to comply, and the Central Bank may extend that. Having no company does not end the licence question.
  6. So the UAE’s offer is real but conditional: low tax on personal investment, licensing for anything that looks like a business, and active policing of marketing. Leaving another country to become a UAE resident is covered in lesson 7.2.3; the home country may still tax, and tax residence is a separate test from holding a visa (lesson 7.2.6). A practical check: decide whether the activity is personal investment or a business and, if a business, whether turnover could pass AED 1 million; then find the exact regulator for the activity and zone and confirm the firm is not on VARA’s enforcement list.

Key facts

  • UAE corporate tax applies to financial years beginning on or after 1 June 2023 at 9% on taxable income above AED 375,000.
  • Under Cabinet Decision No. 49 of 2023, an individual’s business is subject to UAE corporate tax only if turnover exceeds AED 1 million in a calendar year, and personal investment income is excluded.
  • UAE Cabinet Decision No. 100 of 2024 took effect on 15 November 2024 and exempts transfers and conversions of virtual assets from VAT retroactively from 1 January 2018.
  • VARA listed cease-and-desist orders and financial penalties against The Open Network Foundation on 24 July 2025 for breaching its marketing regulations.
  • Article 62 of the UAE’s Federal Decree-Law No. 6 of 2025, effective 16 September 2025, brings DeFi and decentralised applications that facilitate licensed financial activities under Central Bank licensing.
  • Federal Decree-Law No. 6 of 2025 gave existing businesses until 16 September 2026 to comply, with the Central Bank able to extend that period.

Exercise nine, six, three, one

9CollectList up to 9 crypto activities a UAE resident might carry on, from holding a wallet to running a trading desk or launching a protocol.
6ClusterSort them into 6 groups: personal investment, business trading, services to others, marketing to residents, DeFi or protocol operation, and activities in a financial free zone.
3DistillReduce the 6 to 3 lines that decide whether tax or a licence applies.
1CrystallizeWrite 1 sentence explaining when crypto income in the UAE stops being personal investment income.

Fact check

Dates, figures and claims checked against the published sources listed below.

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