The UAE Federal Tax Authority issued VAT Public Clarification – VATP039, providing clarification on the treatment of cryptocurrency mining on 13 January 2025.
In a case of proof of work, a person can mine crypto currency for his own account, or for someone’s account by providing access to excess computational power or data farms.
Crypto currency mining by a person for his own account is not a taxable supply and falls outside the scope of VAT. Mining crypto currency on behalf of another person, i.e. supplying computational power, is considered to be a taxable supply of services.
Input tax incurred on expenses by a person mining for his own account would not be recoverable as the person would not be incurring these expenses to make a taxable supply. However, input tax incurred by a registrant mining on behalf of another person may be recovered to the extent that the input tax is incurred to make a taxable supply.
