What happened?
The United Arab Emirates (UAE) has revealed plans to implement an automatic crypto tax reporting system by 2027. In a recent government release, the UAE Ministry of Finance disclosed its intention to introduce the Crypto-Asset Reporting Framework (CARF), having signed the Multilateral Competent Authority Agreement. The first tax information reporting through CARF is expected in 2028.
Who does this affect?
This development impacts all participants in the crypto sector, including exchanges, custodians, traders, and advisors. Investors who rely on the UAE as a low-tax or no-tax hub will need to ensure they report their crypto holdings correctly in their home jurisdictions. UAE-based exchanges, custodians, and wallet providers will be required to collect and report customer data, much like banks and brokers do under FATCA/CRS.
Why does this matter?
This move symbolizes a significant shift in the market, possibly affecting investor behaviors and market transparency. Stricter KYC and AML processes can be expected as platforms prepare to comply with international reporting standards. While this may decrease regulatory uncertainty and reputational risk, appealing to institutional investors, privacy-focused investors who depend on crypto for tax avoidance or secrecy might feel uneasy due to the reduced anonymity.