VAT and Cryptocurrency Mining in the UAE: Key Changes in 2025

In 2025, the tax regulation of cryptocurrency mining in the UAE underwent significant changes, affecting both private miners and companies providing computing power services. In this article, international law firm Antwort Law will analyze the key aspects of mining taxation in the UAE, including the difference between mining cryptocurrency for personal use and providing services to third parties, the nuances of applying the VAT reverse charge mechanism for non-residents, as well as possible tax risks. We will also tell you how Antwort Law helps cryptocurrency businesses ensure tax transparency, avoid fines and optimize their tax burden.

1. Mining for personal use

Mining cryptocurrency for personal use without subsequent sale to third parties is not subject to VAT, that is:

• Value Added Tax (VAT) is not charged.
• Input tax is not refundable.

Thus, if an individual in the UAE has purchased mining equipment and uses the mined cryptocurrency exclusively for personal needs, then he is not required to register as a VAT taxpayer, but at the same time there will be no opportunity to refund the tax on the costs of equipment and electricity.

2. Mining for third parties (provision of mining services for a fee)

If a company or an individual provides computing power in exchange for a fee, such activity is recognized as the provision of a service and is subject to taxation:

• If services are provided in the UAE, a VAT rate of 5% applies.
• If services are provided to non-residents, a zero VAT rate (0%) may be applied, subject to compliance with the requirements of Article 31 of Cabinet Resolution No. 52/2017.
• In both cases, the taxpayer can reimburse input tax (for example, costs of equipment and electricity).

Thus, a company registered in the UAE and having entered into a contract with a foreign partner for the provision of mining capacities, subject to the conditions of Article 31 of the Cabinet Resolution No. 52/2017, may apply a 0% VAT rate. However, if the services are provided within the country, the company must charge VAT at a rate of 5%.

Reverse charge of VAT and registration of non-residents

If a foreign company (non-resident) provides mining services to clients located in the UAE, the fact of tax registration of the recipient of services is of fundamental importance for tax purposes. Depending on this circumstance, two options are possible:

1. The recipient of services is registered with the UAE Federal Tax Authority (FTA): in this case, the reverse charge mechanism is applied, in which the obligation to calculate and pay VAT is imposed on the recipient of services.

2. The recipient of services is not registered with the UAE tax authority: in such a situation, the obligation to register with the UAE tax authority and independently calculate and pay VAT arises for the foreign service provider (non-resident).

Thus,

• if the client is registered in the UAE tax system, he independently calculates and pays VAT under the reverse charge mechanism;
• if the client is not registered, the obligation to pay VAT is imposed on the foreign company providing the services.

Failure to comply with tax legislation may lead to the following consequences:

• Refusal to refund VAT (if the company incorrectly applies tax rates).
• The penalty for late registration of a non-resident is from 20,000 dirhams (approximately 5,500 US dollars).
• The penalty for incorrect VAT calculation is up to 300% of the amount of unpaid tax.
• Suspension of the company's activities and blocking of bank accounts for tax evasion.

Although the tax regime in the UAE remains one of the most loyal to the cryptocurrency business, especially in the mining sector, let's figure out how favorable the conditions in the UAE are compared to other jurisdictions. Below are the key features of the tax regulation of mining in a number of countries, which, along with the UAE, are often considered by cryptocurrency businesses when choosing a location for operations.

• UAE: VAT on mining - 5% (0% for export), input tax - input tax compensation is possible, features - reverse VAT accrual for non-residents.
• USA: VAT on mining - no federal VAT, input tax - expenses can be written off in taxes, features - regulation depends on the state.
• EU: VAT on mining - depends on the country, input tax - a deduction is available in some countries, features - cryptocurrency transactions are regulated by MiCA.
• Kazakhstan: VAT on mining - 12%, input tax - a deduction is possible, features - state support for mining, low electricity tariffs.
• Singapore: VAT on mining – 0%, tax on input costs – deductions possible, features – liberal regulation of digital assets.

UAE offers favorable conditions for cryptocurrency business, but require transparent tax reporting. Antwort Law offers legal support and tax consulting in the field of cryptocurrencies, including:

• Tax risk analysis and VAT consultations
• Company registration and tax optimization
• Reporting and VAT calculation
• Consultations on the application of tax benefits and exemptions
• Legal support for transactions with digital assets
• Interaction with UAE tax authorities

We are ready to help you adapt to new requirements, minimize tax risks and ensure that your business complies with current UAE regulations.

For consultation or to order legal services, contact us.

Lidia Ivanova

International lawyer
Antwort Law