The United Arab Emirates has exempted crypto transactions from paying value-added tax (VAT), bringing the industry into line with several traditional financial services.

The change, which takes effect Nov. 15, applies retrospectively to transactions from as far back as Jan. 1, 2018. The Arabic version of the Federal Tax Authority's update was made public on Oct. 2, 2024, and the English translation was made public on Oct. 4, 2024.

The exemption makes clear for the first time that the tax doesn't apply to digital assets. It covers the exchange of and transfer of ownership of those assets, which means all cryptocurrency transfers and conversions will now be exempt from paying the 5% levy.

"The UAE has essentially classified virtual assets in the same bucket as traditional financial services – several of which are already exempt from VAT. This legitimizes VAs," said Ankita Dhawan, a senior associate at Métis Institute, a dispute resolution think tank.

Read More: What a Dubai Court Ordering a Company to Pay Its Employee in Crypto Means

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