Dubai has always had a near zero taxation and legislative framework that would allow the proliferation of crypto.
Initially for finance and now also for crypto, Dubai has organized itself with very low taxation, almost non-existent bureaucracy and speed of operations; now, there are those who wanted to do more.
A new free zone for crypto in Dubai
It’s time for free zones in the United Arab Emirates (UAE) or rather it always has been but new ones are being added.
Free zones for transactions are areas where each entrepreneur does not have a hidden minority partner (the state) but is 100% the owner.
In addition to total ownership of the business conducted, entrepreneurs enjoy even more streamlined tax regimes and ad hoc laws for their activities.
One of the seven Emirates, Ras Al Khaimah, is about to launch a new free zone for the crypto world.
The launch-ready free zone improves the already excellent position taken by the UAE toward players who want to invest in the crypto asset.
RAK DAO (RAK Digital Assets Oasis, this is the name of the new tax-free zone:
“will be a purpose-built, innovation-enabling free zone for unregulated activities in the virtual asset sector.”
To join the free zone it will be necessary to apply starting in April this year, as reported in a note in the official document.
The free zone has been established ad hoc for all lovers of crypto, but also of the metaverse, blockchain and AI.
The tax relief will cover utility tokens, wallets, NFTs (non-fungible tokens), DAOs, dApps and activities in Web3, among others.
Sheikh Mohammed bin Humaid Abdullah AI Qasimi who chairs the RAK International Corporate Centre said:
“We are building the free zone of the future for the companies of the future. As the world’s first free zone exclusively dedicated to digital and virtual asset companies, we look forward to supporting the ambitions of entrepreneurs around the world.”
Free zones in the United Arab Emirates already existed and in these zones aimed at free trade each person owns 100% of the business conducted.
Criminal law in free zones is the same as in all UAE but with modifications depending on the zone.
Irina Heaver, attorney for crypto practices in the UAE said:
“RAK DAO will start with non-financial activities first, then may introduce financial activities at a later stage. Entrepreneurs will not yet be able to launch a cryptocurrency exchange, which is a financial activity regulated by ESCA.”
Regulators and taxation
The Securities and Commodities Authority (SCA) which is one of the top regulators in Dubai has authority over all of the Emirates except just the free zones.
The recent Federal Digital Asset Law stipulated the limits of the SCA’s jurisdiction.
The SCA has no power in free zones such as Abu Dhabi Global Market (ADGM), Dubai International Financial Centre (DIFC), etc., which have their own financial regulators.
There are 40 free zones in total, and prominent among them are the Dubai Multi Commodities Center (DMCC), DIFC and ADGM pending RAK DAO precisely.
Guiding principles on future regulations and future free zone institutions were regulated in September last year by the ADGM.
Source: https://en.cryptonomist.ch/2023/02/28/dubai-paradise-crypto/