> ## Content Index > Fetch the complete content index at: https://www.d-x.ae/llms.txt > Use this file to discover other available public pages before exploring further. # FTA Sets Digital Currency Conversion Method for UAE VAT Returns - URL: https://www.d-x.ae/fta-sets-digital-currency-conversion-method-for-uae-vat-returns/ - Published: 2026-09-07T10:12:36.000Z - Updated: 2026-09-07T10:12:36.000Z - Author: Decode-X - Tags: Developments, Business The UAE Federal Tax Authority has introduced a prescribed method for converting digital-currency values into UAE dirhams when those values need to be disclosed in a VAT return. Directive on Tax Transactions No. 3 of 2026 states that it was issued on 14 July 2026, while the FTA legislation portal records a publication date of 17 July 2026. The directive applies to a Taxable Person that supplies a digital currency, as well as a Taxable Person supplying goods or services where the consideration is received in digital currency. It creates a standard calculation and record-keeping process for determining the dirham value reported in the VAT return. ### How the Conversion Method Works The first step is choosing three centralised public digital-currency exchange platforms from the list published by the FTA. The list currently contains five names: Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget and Payward FZCO. Their inclusion is specifically for the purposes of this VAT-conversion directive. It should not be interpreted as an investment recommendation or ranking of the platforms. Once three platforms are selected, the same three must be used for all relevant transactions carried out during the same calendar year. This prevents the conversion method from changing from one transaction to another depending on which exchange rate is more favourable at the time. For each transaction, the Taxable Person calculates the numerical average of the digital currency's exchange rates published by the three selected platforms. The applicable rates are those prevailing at the date and time of the supply or, where applicable, the date and time the digital-currency consideration is received. That average is then used to convert the digital-currency value into UAE dirhams. Businesses within scope must also retain records showing the exchange rates obtained from each of the three platforms, in addition to their other record-keeping obligations relating to the supply. This provides supporting evidence for how the dirham value reported in the VAT return was calculated. The directive also addresses a situation that still requires additional guidance. The FTA says it will publish a separate public clarification covering the procedure to follow when the exchange rate for a particular digital currency is not available on three platforms from its published list. ### The Directive Does Not Make Every Crypto Transaction Subject to 5% VAT The new conversion method deals with valuation and VAT-return disclosure. It does not by itself determine that every transaction involving digital currency is subject to the UAE's standard 5 per cent VAT rate. The VAT treatment of the underlying transaction still matters. This distinction is particularly important for virtual assets. FTA Public Clarification VATP040 states that the transfer of ownership of virtual assets, including virtual currencies such as cryptocurrencies, and the conversion of virtual assets are exempt from VAT under Article 42(3)(e) of the amended Executive Regulation when supplied on or after 1 January 2018\. The clarification says this exemption applies retrospectively from that date. That exemption does not automatically extend to every virtual-asset-related service. The same FTA clarification states that keeping and managing virtual assets and enabling control over them, such as managing crypto wallets, is taxable when supplied in the UAE for an explicit fee, commission or similar charge. For a business selling ordinary goods or services and accepting digital currency as payment, the VAT treatment of those goods or services therefore remains relevant. Directive No. 3 focuses on how the digital-currency amount is converted into dirhams when that value needs to be disclosed in the VAT return. ### Who Needs to Pay Attention The practical impact falls on Taxable Persons covered by the directive that supply digital currency or receive digital currency as consideration for goods or services. Because the same three exchange platforms must be used throughout the calendar year and supporting exchange-rate records must be retained, businesses within scope need a consistent process for capturing the correct rates at the applicable date and time. The change is therefore narrower than a new tax on crypto itself. It standardises how qualifying digital-currency values are translated into dirhams when they need to appear in a UAE VAT return. **Key Takeaways** - FTA Directive on Tax Transactions No. 3 of 2026 establishes a standard method for converting digital-currency values into UAE dirhams for VAT-return disclosure. The directive states that it was issued on 14 July 2026, while the FTA portal lists a publication date of 17 July 2026. - Taxable Persons within scope must select three platforms from the FTA's published list of five and use the same three for relevant transactions throughout the same calendar year. - The dirham value is calculated using the numerical average of the relevant exchange rates from the three selected platforms at the applicable date and time, with supporting exchange-rate records retained. - The directive does not mean that every virtual-asset transaction attracts 5 per cent VAT. FTA guidance states that transfers of ownership and conversions of virtual assets are exempt under the relevant VAT rules, while some other virtual-asset services can have different VAT treatment. ![](https://storage.ghost.io/c/5b/31/5b31839b-65ca-403d-ac7b-509cf7237573/content/images/2026/09/image-5.png) **Sources:** [Federal Tax Authority — Directive on Tax Transactions No. 3 of 2026](https://tax.gov.ae//Datafolder/Files/Legislation/2026/2026-03%20-%20VAT%20-%20Method%20of%20Converting%20Consideration%20Received%20in%20Digital%20Currency%20into%20AED%20-%2007%202026.pdf?utm%5Fsource=chatgpt.com), [Federal Tax Authority — VAT Public Clarification VATP040](https://tax.gov.ae/Datafolder/Files/Pdf/2025/VATP040%20-%20Amendments%20to%20VAT%20ER%20-%2014%2003%202025.pdf?utm%5Fsource=chatgpt.com), [Alvarez & Marsal](https://www.alvarezandmarsal.com/thought-leadership/middle-east-tax-alert-uae-vat-directive-no-3-of-2026-converting-digital-currency-values-into-aed?utm%5Fsource=chatgpt.com), [Khaleej Times](https://www.khaleejtimes.com/business/uae-sets-out-how-crypto-payments-must-be-converted-to-dirhams-for-vat?utm%5Fsource=chatgpt.com). --- **Disclaimer:** This content is for educational and informational purposes only. It is not legal, financial, investment, cybersecurity, medical, business, career, or other professional advice. Verify important information with official sources or qualified professionals before acting.