UAE Law and Practice Contributed by: Irina Heaver and Zainab Kamran, NeosLegal
Company Rulebook includes ESG disclosure provi- sions for VASPs. VARA determines the applicable disclosure level for each VASP during the licensing process, having regard to factors such as staff numbers, turnover and busi- ness model. Three tiers apply: voluntary disclosure; compliance disclosure, requiring VASPs to explain their ESG strategies in the UAE, including in relation to virtual asset mining or staking; and mandatory disclo- sure, requiring VASPs to publish an annual ESG report covering governance policies, sustainability risks and environmental impact, and to maintain publicly avail- able information on diversity and inclusion initiatives. VASPs engaged in virtual asset mining or staking are subject to additional disclosure obligations regardless of their assigned disclosure level, including the pub- lication of information on renewable energy use and decarbonisation initiatives. 1.2.4 Tax The UAE operates a relatively straightforward tax regime compared to many other jurisdictions. There is no personal income tax and no capital gains tax. The principal taxes applicable to businesses are VAT at 5% and corporate tax at 9% on taxable profits, including capital gains, exceeding AED375,000. Cabinet Decision No 100 of 2024 amended the VAT Executive Regulations to exempt the transfer, conver- sion, and custody and management of virtual assets. The transfer and conversion exemptions apply retro- actively from 1 January 2018, while the custody and management exemption applies from 15 November 2024 only. The Federal Tax Authority (FTA) has con- tinued to issue guidance refining the scope of these exemptions. Notably, guidance VATP039 of January 2025 clarified that cryptocurrency mining does not qualify for the exemption and remains subject to VAT. On the corporate tax side, the FTA has issued a series of clarifications addressing the treatment of digital assets and investment vehicles, including in the context of asset managers and investment funds, although some uncertainty remains in relation to spe- cific business models.
At the international level, the UAE signed the Multi- lateral Competent Authority Agreement on the OECD Crypto-Asset Reporting Framework (CARF) on 21 July 2025, committing to commence automatic exchang- es of information with partner jurisdictions by 2028 in respect of the 2027 reporting year. A public con- sultation on domestic implementation was launched in September 2025. The precise scope of obligations on crypto-asset service providers under the UAE’s domestic implementing framework remains to be determined and is an area to watch. 1.2.5 Insolvency Onshore UAE The CMA framework under Federal Decree-Laws Nos. 32 and 33 of 2025 does not contain specific insolven- cy or resolution provisions for virtual asset firms. The general recovery and resolution regime applies equally to all Licensed Persons, including those engaged in virtual asset activities. The regime includes require- ments for systemically important entities to maintain prudential recovery plans, an early intervention frame- work enabling the CMA to take corrective action upon financial deterioration, and resolution powers cover- ing the appointment of a resolution administrator, the transfer of assets and liabilities, the write-off of debt obligations and orderly wind-down, subject to a statu- tory hierarchy of claims. VARA Part VII of VARA’s Company Rulebook sets out spe- cific wind-down and insolvency requirements for VASPs. All VASPs are required to maintain a Wind Down Plan covering risk identification and mitigation, client virtual asset safekeeping and return, person- nel arrangements, communications strategy, knowl- edge transfer and record retention. A VASP electing to discontinue operations must notify VARA within one business day of that decision, implement the Wind Down Plan subject to VARA’s directions, and report to VARA on a weekly basis throughout the process. Client money and client virtual assets are expressly excluded from the wind-down asset pool and may not be used to satisfy the VASP’s liabilities. In the event of formal insolvency proceedings, the VASP must coop- erate fully with the appointed insolvency officeholder to implement the Wind Down Plan, or such other plan as the officeholder considers appropriate.
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