UAE VARA now requires you to pay 1000 AED for some certificate

[OffChance]

Looks like they just came up with some new requirement where you need to pay 1k aed to get some No Objection Certificate to be able to continue your crypto prop trading activity. Received an email as well regarding it

More info: https://www.vara.ae/en/vara-news/vara-publishes-clarification-and-further-information-on-fees/

 

[Ancova]

Looks like they just came up with some new requirement where you need to pay 1k aed to get some No Objection Certificate to be able to continue your crypto prop trading activity. Received an email as well regarding it

More info: https://www.vara.ae/en/vara-news/vara-publishes-clarification-and-further-information-on-fees/

View attachment 4924

Yes it has become more regulated than at the beginning of the year. Some of our clients who already had everything set up, got an email that they need to pay even 50k aed.

Everything crypto related has to be dealt directly with VARA. Your free zone neither your agent can assist here.

 

[carlosbl]

Yes it has become more regulated than at the beginning of the year. Some of our clients who already had everything set up, got an email that they need to pay even 50k aed.

Everything crypto related has to be dealt directly with VARA. Your free zone neither your agent can assist here.

What happens with an IT company that specializes in software development and besides of that does some trading with its own crypto? What role does VARA play in this scenario?

 

[Ancova]

VARA approval is only needed for the 6 existing crypto activities. If you trade crypto as a private individual, nothing to do with VARA.

 

[carlosbl]

VARA approval is only needed for the 6 existing crypto activities. If you trade crypto as a private individual, nothing to do with VARA.

So, if the company engages in crypto trading using its own funds, even if it's a small amount, do they necessarily need to register the activity as crypto prop trading?

The issue is that trying to onboard such crypto companies with UAE banks is like hitting a brick wall. I don´t know if this is going to change with an NOC from VARA.

With the fiscal changes in UAE, I assume that company capital gains remain at 0% tax, am I right?

 

[Fred]

That's why I said from the very beginning to avoid any Crypto related Business Activities in the UAE.

 

[carlosbl]

That's why I said from the very beginning to avoid any Crypto related Business Activities in the UAE.

You are right, but having an income-generating activity but being forced to keep it hidden is problematic.
Without 'proof of funds' or 'source of funds', justifying these revenues becomes a major headache.
It feels like we're pushed to operate in the shadows, which isn't ideal for legitimate businesses.

 

[wellington]

Malaysia... on the border of Singapore is the place to go...

 

[Ancova]

So, if the company engages in crypto trading using its own funds, even if it's a small amount, do they necessarily need to register the activity as crypto prop trading?

The issue is that trying to onboard such crypto companies with UAE banks is like hitting a brick wall. I don´t know if this is going to change with an NOC from VARA.

With the fiscal changes in UAE, I assume that company capital gains remain at 0% tax, am I right?

Yes, you can just trade as an individual. If you want to trade as a company, you need to have one of the activities.

 

[zaybxc]

Yes, you can just trade as an individual. If you want to trade as a company, you need to have one of the activities.

What's a crypto prop trading company for if an individual can trade his own crypto personally without the need of a company?
It's a nonsense.

 

[Ancova]

What's a crypto prop trading company for if an individual can trade his own crypto personally without the need of a company?
It's a nonsense.

Some people want to trade under the company so the company name appears on the exchange.

 

[carlosbl]

What's a crypto prop trading company for if an individual can trade his own crypto personally without the need of a company?
It's a nonsense.

You raise an interesting point. However, crypto prop trading companies do have their reasons:

• Pooling Resources: Prop trading firms can pool resources from multiple investors, traders, and quants, amplifying potential returns and diversifying risks.
• Professional Expertise: These firms often employ quants, analysts, and strategists who provide a level of expertise that individual traders might not possess.

While individual trading has its merits, there are benefits to the structured approach of a prop trading company, specially if you want to scale that business. Many crypto prop trading firms are registered in jurisdictions like the Cayman Islands, Gibraltar, Singapore, HK, and BVI, which offer regulatory and tax advantages.

 

[carlosbl]

By the way, with the recent changes, capital gains are exempt only if they're derived from a participating interest in either foreign or domestic companies.

There are also some other situations, like intra-group transfers, reorganizations, and restructuring, where capital gains remain exempt.

However, all other capital gains are taxable at the standard rate of 9%. I believe this will put the UAE at a disadvantage compared to other jurisdictions, such as Singapore, Hong Kong, Gibraltar, or Switzerland, where capital gains treatments can be more favorable.

You can find more details in the following link to the FTA, specifically at question no. 201:

https://mof.gov.ae/corporate-tax-faq/

 

[zaybxc]

@carlosbl Thanks for your explanations. It seems that a crypto prop trading company makes sense if someone wants to grow big; for the average crypto trader/investor it does not.

@OffChance If a may ask, do you also trade crypto on a personal level in the UAE?
I read that in the UAE there's no tax on personal investment income, so a crypto trader/investor might save on taxes (as now a 9% corporation tax has been introduced).

 

[Ancova]

@carlosbl Thanks for your explanations. It seems that a crypto prop trading company makes sense if someone wants to grow big; for the average crypto trader/investor it does not.

@OffChance If a may ask, do you also trade crypto on a personal level in the UAE?
I read that in the UAE there's no tax on personal investment income, so a crypto trader/investor might save on taxes (as now a 9% corporation tax has been introduced).

I’ve been trading crypto on a personal level for years now. You just need a residency, open a personal bank account, connect it to an exchange and that’s basically it. Never had any issues

 

[carlosbl]

@carlosbl Thanks for your explanations. It seems that a crypto prop trading company makes sense if someone wants to grow big; for the average crypto trader/investor it does not.

@OffChance If a may ask, do you also trade crypto on a personal level in the UAE?
I read that in the UAE there's no tax on personal investment income, so a crypto trader/investor might save on taxes (as now a 9% corporation tax has been introduced).

@zaybxc Totally agree with you. A prop trading company is great for teaming up with other investors and traders. For a sole trader, it's overkill, especially now with Dubai's 9% tax on such companies. ‍

 

[PiersBlack]

I’ve been trading crypto on a personal level for years now. You just need a residency, open a personal bank account, connect it to an exchange and that’s basically it. Never had any issues

Have you been able to withdraw directly from exchange into your personal bank account without issues? If so, may we know what exchange did you use?

 

[zaybxc]

I’ve been trading crypto on a personal level for years now. You just need a residency, open a personal bank account, connect it to an exchange and that’s basically it. Never had any issues

That's what I thought, thank you.

Is it allowed to open a company only to get a resident visa in the UAE?
The company would actually be inactive, not issuing any invoice and would not even have a business bank account.

I'm trying to figure out a plan for the next crypto bull run... if it'll happen

 

[Jbb1]

That's what I thought, thank you.

Is it allowed to open a company only to get a resident visa in the UAE?
The company would actually be inactive, not issuing any invoice and would not even have a business bank account.

I'm trying to figure out a plan for the next crypto bull run... if it'll happen

Yes it’s possible but it’s cheaper if you get a freelance visa.

 

[Ancova]

Have you been able to withdraw directly from exchange into your personal bank account without issues? If so, may we know what exchange did you use?

Yep, bitoasis. No issues at all

That's what I thought, thank you.

Is it allowed to open a company only to get a resident visa in the UAE?
The company would actually be inactive, not issuing any invoice and would not even have a business bank account.

I'm trying to figure out a plan for the next crypto bull run... if it'll happen

Yes it’s allowed