A client accepts 0.5 Ether for a design project. The VAT return asks for a dirham figure. So which rate do you use, from which exchange, at which second of the day? Until this month there was no single right answer. Now there is.
On 17 July 2026 the Federal Tax Authority (FTA) published Directive on Tax Transactions No. 3 of 2026, which sets out exactly how businesses convert digital currency into UAE dirhams for their VAT return. If your business ever gets paid in crypto, or pays in it, this affects how you report the deal.
TL;DR: From 17 July 2026, any UAE business supplying or receiving digital currency must value the deal in AED using three exchanges from the FTA's approved list. Use the same three all year and apply the average of their rates at the time of supply. The directive fixes valuation, not whether the deal is taxable.
What Did the FTA Change on 17 July 2026?
The FTA introduced a standard method for putting a dirham value on a crypto transaction. Before Directive No. 3 of 2026, businesses picked their own exchange rate and their own source, so two firms could report the same sale at different values. The directive removes that discretion.
It applies to taxable persons who supply digital currency, or who receive it as payment for goods or services (VATupdate, 2026). The rule sits under the standard 5% VAT system that has run since 2018 (ClearTax, 2026), and it matters because crypto is no longer a fringe payment method here. The Dubai Land Department recorded over 200 crypto-denominated property sales in 2025, with values from 500,000 to 15 million US dollars (Statista, 2026).
Does Accepting Crypto Mean You Owe VAT?
Not by itself. The directive decides how you value a transaction, not whether it is taxable. That distinction carries the whole rule, so it is worth getting straight.
Trading or converting a virtual asset is treated as an exempt financial service. The FTA amended the VAT Executive Regulations on this in October 2024, with effect from 15 November 2024 and backdated to 1 January 2018 (BDO, 2024). So swapping Bitcoin for Ether, or crypto for cash, does not carry 5% VAT.
What the directive targets is different. If you sell a taxable service and take crypto as payment, the service is still taxable at its normal rate. You need a dirham value for that supply, and Directive No. 3 tells you how to reach it. In our experience this is the point clients miss: the coin might be exempt, but the sandwich, the software licence, or the consulting hour you sold for it is not.
How Do You Convert Crypto to AED for Your VAT Return?
Pick three exchange platforms from the FTA's approved list, use the same three for the whole calendar year, and report the arithmetic average of their three rates (VATupdate, 2026). You cannot switch your combination mid-year to chase a better number.
The rate you take is the one prevailing at the date and time of supply, or the time you receive the payment. That timing point matters because crypto moves fast, and a rate an hour later can differ by a noticeable margin.
Here is a worked example. You supply a standard-rated service and receive 0.5 Ether. At the moment of supply your three chosen exchanges quote ETH at AED 9,000, 9,020, and 9,040. The average is AED 9,020, so the consideration is 0.5 times 9,020, which is AED 4,510. Output VAT at 5% is AED 225.50. That AED 4,510 is what goes on the return, not a rounded guess.
The FTA's Approved Exchange List
The FTA's approved list currently names five centralised platforms: Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget, and Payward FZCO, the UAE entity behind Kraken (VATupdate, 2026). You choose any three of these five and stick with them.
One question clients always ask is what happens with a coin none of the three list. The FTA has said it will issue further guidance for currencies that do not appear on the approved platforms, so for now the safest position is to trade in assets your three chosen exchanges actually quote. If your business handles a wider range of tokens, factor that into which three platforms you commit to for the year.
The choice is not trivial. Once you document your three, that decision governs every crypto-priced supply you report until the calendar year ends.
What Records Must You Keep?
You must retain timestamped records of each rate and the calculation behind it, and you must document your platform selection before your first covered transaction (VATupdate, 2026). A screenshot after the fact is not enough, because the rate you need is the one at the exact time of supply.
What we see most often is businesses that can show the final dirham figure but not the three underlying rates or the moment they were captured. If the FTA asks, you need the workings, not just the answer. Our guide on how the FTA audit window works covers how long these records should survive.
Build the capture into your process now. If you use accounting software or an e-invoicing setup, note that the same discipline applies to your wider e-invoicing records. Getting the value wrong is one of the common VAT return errors that trigger FTA penalties, so treat the calculation as part of your audit trail.
Frequently Asked Questions
Who does Directive No. 3 of 2026 apply to?
Any VAT-registered business in the UAE that supplies digital currency, or that receives crypto as payment for goods or services. Registration is mandatory once taxable supplies pass AED 375,000 a year, and voluntary from AED 187,500 (ClearTax, 2026). If you never touch crypto in a supply, the directive does not change anything for you.
Do I charge 5% VAT when I sell crypto?
No. Trading and converting virtual assets is an exempt financial service, backdated to 1 January 2018 (BDO, 2024). VAT still applies to the taxable goods or services you sell for crypto, and that is where the conversion method matters.
Can I change my three chosen exchanges during the year?
No. You select three platforms from the FTA's approved list and use the same three for the full calendar year. You can reconsider your selection for the next year, but not mid-year.
Which rate do I use if the price moves during the day?
The rate at the date and time of supply, or when you receive the payment. Capture it then and keep a timestamped record, because a rate pulled later will not match what the FTA expects.
What if the coin I received is not on any approved exchange?
The FTA has said it will publish further guidance for currencies outside the approved list. Until then, the practical approach is to price supplies in assets your three chosen exchanges quote, and take advice before reporting anything the method does not cleanly cover.
If your business takes crypto as payment, or is thinking about it, the valuation and record-keeping need to be right before your next return. Get in touch and we'll walk through how to set up your three-exchange method, capture the rates, and keep the trail the FTA expects. You can also see how we support UAE businesses on VAT and FTA compliance.