The Federal Tax Authority (FTA) has announced that businesses must complete Corporate Tax registration within 90 days from the Date of Incorporation / MOA.
Cryptocurrencies have attracted global investor interest in recent years. The UAE has seen increasing numbers of platforms established to support crypto trading. However, as an emerging asset class, cryptocurrencies currently lack detailed, dedicated accounting guidelines. Consequently, the process of accounting for cryptographic assets can be intricate, involving multiple complex elements and factors. In this blog, we will explore the accounting methods for cryptocurrencies in the UAE.
Is Cryptocurrency an Intangible Asset?
Experts suggest that since the International Financial Reporting Standards (IFRS) do not contain a specific standard for crypto assets, the use of the IAS 38 Intangible Assets may be more appropriate. This is because the characteristics of virtual currency assets closely resemble those of other conventional intangible assets. Therefore, the IAS 38 standard can aid in the proper accounting of crypto assets, as it provides a suitable framework for their recognition, measurement, and disclosure in financial statements.
As per the guidelines in IAS 38, an asset can be classified as identifiable if it possesses the ability to be separated or derived from contractual or legal rights. Moreover, an asset can be deemed divisible from the entity if it can be sold, transferred, licensed, rented, or exchanged independently or in conjunction with any associated contract, identifiable asset, or liability.
Thus, cryptocurrencies appear to satisfy the definition of an intangible asset under IAS 38, being separable from the holder and capable of independent sale or transfer. Furthermore, in accordance with IAS 21, it does not grant the holder the right to receive a set or determinable number of currencies. In a nutshell, cryptocurrency meets the definition of an intangible asset as it is separable from its holder and able to be sold or transferred individually.
Difficulties in Bookkeeping Cryptographic Assets
Since it is evolving, everyone involved in the field of cryptographic assets should stay informed of the latest developments in this area to remain updated on changes.
Some crypto assets may be hybrid in nature, exhibiting multiple characteristics, making it difficult to determine their appropriate accounting treatment.
IFRS does not provide an exclusive advisory for cryptographic assets, so users may have to categorize and account for these assets based on existing standards.
The volatility of their prices makes it hard to determine the fair value of crypto assets.
Conclusion
Accounting for cryptocurrencies in the UAE requires rigorous attention and informed judgement. With the emergence of cryptocurrencies as a new and rapidly evolving asset class, entities must remain informed and vigilant in managing these assets.
At Reyson Badger, we understand the importance of accurate accounting and reporting when it comes to cryptographic assets, which is why we offer high-quality crypto accounting services in Dubai. Our Dubai-based accounting team is versed in the latest developments in digital-asset accounting and offers tailored guidance to clients navigating this evolving area. We ensure that our clients receive reliable and accurate crypto accounting services to help them effectively manage their cryptographic assets in the ever-evolving UAE market.
