The Central Bank rate does not cover Bitcoin

The Central Bank rate stops at fiat

Article 69 of Federal Decree-Law No. 8 of 2017 converts a dollar invoice at the Central Bank rate on the date of supply. Public Clarification VATP004 has said the same thing since 2018.

Bitcoin is not a currency the Central Bank quotes.

Public Clarification VATP040 is blunt about it. Crypto currencies are not regarded as money, and they are not treated as money.

Until this summer, firms invented a method. One exchange screenshot. A treasury desk rate. Bitcoin to dollars on a foreign venue, then dollars to dirhams at the Central Bank, dressed up as Article 69. None of that is written down.

Directive on Tax Transactions No. 3 of 2026 now is. It is a Directive, not a Public Clarification. It binds you and it binds the FTA until it is replaced, withdrawn or overtaken by legislation. The power sits in Article 54 bis of Federal Decree-Law No. 28 of 2022 on Tax Procedures, inserted by Federal Decree-Law No. 17 of 2025. That Article 54 bis is not the input-tax denial rule in the VAT Law. Always name the parent law.

The PDF is signed 14 July 2026, 29 Muharram 1448H. The FTA register published it on 17 July. Clause 6 says only that the Directive shall be published in the Official Gazette. It does not state a commencement date. Of the five Directives issued in July, only No. 2 does. Do not invent one.

Selling Bitcoin is not the same as being paid in it

Clause 1 covers a supply of a digital currency. It also covers a supply of goods or services for which the consideration arrives as a digital currency.

The first limb is usually exempt. Cabinet Decision No. 100 of 2024 put the transfer of ownership of virtual assets, including virtual currencies, and the conversion of virtual assets, into Article 42 of the Executive Regulation. Public Clarification VATP040 places that exemption in Article 42(3)(e) and makes it retroactive from 1 January 2018. Buying and selling Bitcoin on an exchange is that transfer.

Exempt is not outside scope.

The AED value still goes on the return. It feeds the apportionment fraction, and input tax sitting against it is generally blocked. That is the same recovery problem we already see on other exempt lines, and it is why the conversion method matters even when no 5% is due. Read the input tax you cannot reclaim if that is the part that is actually costing you.

The second limb produces the 5%. A fit-out paid in a stablecoin. A software project settled in ether. The supply is whatever the supply is. The crypto is the consideration. Article 34(2) of the VAT Law values non-monetary consideration at market value, excluding tax. Directive 3 is how that market value becomes a dirham figure the return will accept.

Wallet custody and an explicit platform fee stay taxable. VATP040 says so. Mining is a different clarification. This piece is the conversion, not that.

Lock three names, then average the timestamp

Clause 2 is the method.

It is short.

Select three platforms from the FTA list of centralised public digital currency exchange platforms. Use those same three for every transaction in the calendar year. Take the numerical average of the three published rates at the date and time of the supply, or at the date and time the consideration is received, as the case may be. Convert at that average.

The list attached to the Directive has five names. Binance FZE. Bybit Fintech FZE. Deribit FZE. Bitget. Payward FZCO.

You pick three. You do not rotate them in June because one of the other two printed a rate you prefer. Numerical average means add the three rates and divide by three. A volume-weighted figure or a median is not what Clause 2 asks for, and the mid-price on your own book is also out.

Date and time, not the daily close. Bitcoin moves inside an hour. The Directive asks for the rate prevailing at the timestamp of the supply or of receipt. Which of those two? As the case may be. Existing tax-point rules still decide when the supply occurs. An advance in crypto before the work is finished is usually an advance payment. The Directive does not rewrite Article 25 or 26.

A 3.2 Bitcoin invoice, worked through

An example, using figures invented for the arithmetic.

The numbers are labelled as such.

Horizon Code LLC, a Dubai software firm, invoices a client 3.2 Bitcoin exclusive of VAT for an implementation. Date of supply 4 August 2026 at 11:40 Dubai time. Consideration received the same afternoon. Platforms locked for calendar year 2026: Binance FZE, Bybit Fintech FZE and Bitget.

Rates at that timestamp, labelled as an example: AED 392,400, AED 389,850 and AED 391,200 per Bitcoin.

They had been using an internal treasury rate of AED 360,000. Same 3.2 Bitcoin becomes AED 1,152,000. Output tax AED 57,600. The gap on one invoice is AED 4,984.

Four invoices like that in a year put them at AED 19,936. That is above the AED 10,000 line. A voluntary disclosure is then due within 20 business days of becoming aware of it.

Where the dirham figure sits on the return

A taxable service paid in crypto belongs in Box 1, in the emirate of the supply, at the standard rate. The AED value is the three-platform average.

Output tax sits where it always sits.

An exempt transfer of Bitcoin does not. That figure belongs on the exempt line, not in Box 1. The box-by-box VAT201 note is the map if you are unsure which field you are about to pollute.

The tax invoice still needs an AED amount. Article 69 is for a supply in a currency other than the dirham. Crypto is not a currency for that purpose. Print the Directive 3 average. Do not print a Central Bank rate you constructed for Bitcoin.

Article 67 gives you 14 days from the date of supply to issue the invoice. Capture the three rates at the time. Reconstructing them from memory in week two is how the working paper falls apart on audit.

The conversion we still see, and the gaps the Directive left

The mistake we see most is Bitcoin to dollars on one exchange, then dollars to dirhams at the Central Bank rate, filed as if Article 69 applied. It looks tidy. It is the wrong instrument. Article 69 prices fiat, and Directive 3 is the instrument that prices digital currency. Mixing them is how two identical invoices end up thousands of dirhams apart.

Another habit is a screenshot from whichever of the five is cheapest that morning. The lock is the calendar year. Changing the trio in September is a different method, not a refinement.

Some of this is still open, and it is better said that way.

The Directive does not state its own commencement. Clause 4 says the Authority will publish a public clarification for the case where a rate is not available on three platforms from the list. The FTA guides page was last updated on 15 July 2026, two days before this Directive was published. That clarification is not there. Illiquid tokens are an open problem. Do not invent a fourth source while you wait.

Most listed platforms quote dollar pairs. The Directive says convert using the numerical average of the exchange rates those platforms publish. It does not say what to do if those rates are in dollars. Do not invent a second conversion.

What a wrong AED figure actually costs

Understate tax by more than AED 10,000 and Form 211 is due within 20 business days of becoming aware. Since 14 April 2026, a self-filed disclosure carries 1% a month on the tax difference, running from the day after the original return was due. Once the FTA notifies an audit, a fixed 15% applies as well, and the 1% keeps running.

Unpaid tax also attracts late payment. Cabinet Decision No. 129 of 2025 replaced the old 2% / 4% / 300% stack with a flat 14% a year, charged monthly, from 14 April 2026.

Clause 3 of the Directive requires you to keep the records that prove the three rates, on top of the usual supply file. Records run five years, fifteen for real estate. Failure to keep required records is AED 10,000 the first time and AED 20,000 if it is repeated inside 24 months, under Table 1 of Cabinet Decision No. 40 of 2017 as amended by Decision 129.

A late return is still AED 1,000 the first time and AED 2,000 if you repeat it inside 24 months.

Getting the crypto figure wrong and then filing late is two separate problems.

Do this before the next return

An afternoon settles the current year.

1. List every 2026 supply of digital currency, and every 2026 supply of goods or services paid in digital currency.
2. Write down the three platforms. Date the note. Keep those three for the rest of the calendar year.
3. For each transaction, pull the three rates at the timestamp of the supply or of receipt. Average them. Convert. File the screenshots with the invoice.
4. Split exempt transfers from taxable supplies paid in crypto. They do not share a box.
5. If a token has no rate on three listed platforms, stop. Wait for the Clause 4 clarification rather than inventing a fourth source.
6. If last quarter used a different method, compute the difference. If it is over AED 10,000, start the disclosure.

Then file the number you can show.