FTA Directive 3 of 2026 Sets How UAE Businesses Convert Digital Currency to AED on VAT Returns

The Federal Tax Authority has published Directive on Tax Transactions No. 3 of 2026 for Value Added Tax on the Method of Converting the Value of Digital Currencies into UAE Dirham. It was issued on 14 July 2026 (29 Muharram 1448H) by Mohamed bin Hadi Al Hussaini, Minister of State for Financial Affairs and Vice Chairman of the FTA, and appeared on the FTA VAT legislation portal on 17 July 2026. Coverage in The National (11 August 2026) and Khaleej Times (6 September 2026) brought the directive to wider attention among UAE finance teams.

The directive does not decide whether crypto is taxable or exempt. It tells VAT-registered businesses how to express digital currency amounts in AED when they complete the VAT return. If customers pay you in digital currency, or you make a supply of digital currency, your return figures must follow this conversion method.

Who must follow FTA Directive No. 3 of 2026?

Clause 1 applies to a Taxable Person in either situation: making a supply of a digital currency, or making a supply of goods or services where consideration is received in digital currency. In both cases, you must convert the digital currency value into AED for disclosure in the tax return, using the method in Clause 2.

For small and medium businesses, the practical trigger is often customer choice of payment method. A B2B invoice settled in Bitcoin, or a retail sale where the buyer sends stablecoin, still needs AED values on the return for the relevant VAT return period. The same applies if your business itself supplies digital currency as part of its activity.

How do you convert digital currency to AED under Clause 2?

Clause 2 sets a three-step mechanism for every conversion in a calendar year.

This is a calculation rule, not a pricing rule for your commercial contracts. Your customer may still pay in digital currency; the directive governs how you report the value in AED when you file VAT in the UAE.

Which exchange platforms has the FTA approved?

Clause 5 states that the FTA publishes the list of centralised public digital currency exchange platforms. The approved platforms named in the directive materials are: Binance FZE, Bybit Fintech FZE, Deribit FZE, Bitget, and Payward FZCO (five in total). You pick any three from that published list and keep them fixed for the calendar year.

If you change platforms mid-year without FTA guidance, you risk inconsistency with Clause 2(a). Treat the three choices as an annual policy decision and document who approved them in your finance team.

What records must you keep?

Clause 3 requires you to retain records proving the exchange rates from each of the three platforms you used, together with your other record-keeping obligations for the supply. That evidence should tie to the date and time you used for the rate (supply time or receipt of consideration).

Screenshots or exports from each platform at the relevant timestamp, plus your working showing the numerical average, are the minimum audit trail. Link those files to the tax invoice or contract for the underlying taxable supply so an FTA review can follow the AED figure on the return back to the crypto amount received.

What if a rate is not available on three listed platforms?

Clause 4 states that the FTA will issue a public clarification for cases where the exchange rate is not available on three platforms from the approved list. Until that clarification exists for your scenario, document the gap and seek professional advice rather than guessing a rate. Non-compliance with return and record-keeping rules can attract general VAT enforcement risk; the directive text does not state a specific penalty amount for this conversion method.

What should UAE SMBs do now?

Map which sales or purchases already involve digital currency, including stablecoins and tokens customers use at checkout. Nominate your three platforms for the current calendar year, write down the averaging procedure, and train whoever prepares the return so AED boxes are never filled from a single exchange quote or an informal spot check.

Official sources: the directive PDF and the FTA VAT legislation listing.

Naqood is FTA-accredited accounting software for UAE businesses. Keeping sales, purchases, and return-ready AED figures in one system makes it easier to align crypto receipts with the directive’s averaging method each period.

Frequently asked questions about FTA Directive No. 3 of 2026

Does Directive 3 make cryptocurrency VAT-exempt or taxable?

No. The directive only explains how to convert digital currency values into AED for disclosure on the VAT return. Whether a supply is taxable, zero-rated, or exempt still follows the existing VAT law and executive regulations.

Can you use different exchanges for different transactions in the same year?

Clause 2(a) requires the same three platforms from the FTA list for all transactions in the same calendar year. You do not switch platforms transaction by transaction within that year.

Which timestamp should you use for the exchange rate?

Use the rate at the date and time of the supply, or at the date and time consideration is received, whichever applies to your transaction under Clause 2(b).

How many platforms are on the FTA approved list?

The directive materials name five centralised public digital currency exchange platforms. You must select three from the FTA-published list and average their rates.

What should you do if you cannot get a rate on three listed platforms?

Clause 4 provides that the FTA will issue a public clarification for that situation. Keep your records of the attempt and follow FTA guidance when it is published.

This guide is for general information and does not constitute tax or legal advice. For how the rules apply to your specific situation, consult a qualified UAE tax adviser. Naqood is an FTA-accredited accounting platform for UAE businesses.