On the occasion of the tenth edition of the Gulf International Congress, a project organized by the Italian Industry & Commerce Office in the UAE, bringing together experts each year to discuss the tax and legal regulations governing business activities in the United Arab Emirates and Saudi Arabia, we presented VARA, the Virtual Asset Regulatory Authority, through a detailed presentation by Dalila Tripi, Tax & Legal Associate at Kelmer Group.
Dubai’s cutting-edge digital strategy in June 2023 is poised to position Dubai as a global frontrunner in the digital sector. It revolves around seven pivotal pillars, encompassing the digital city, digital economy, data and statistics, digital talent, digital infrastructure, cybersecurity, and digital competitiveness.
- Digital Economy: Strategically leveraging technology opportunities.
- Cybersecurity: Aiming to ensure data and digital transaction security.
- Virtual Asset Law: Represented by the establishment of VARA (Virtual Asset Regulatory Authority), a crucial branch of digital economy implementation.
Dubai, an innovation pioneer, has consistently set new world records, ranking first in the GCC for innovation and the Global Innovation Index 2022. Leading the Innovative Cities Index 2022-2023, the city registered 69 digital startups in Q1 2023.
Building upon these achievements, Dubai aims to attract 300 digital startups by 2024. As per D33 targets doubling the sector’s GDP contribution by 2033, reaching 20% from 9.7% in 2022.
VARA, or the Virtual Asset Regulatory Authority, is built on principles of economic sustainability and cross-border financial security. This pioneering regulatory framework accelerates Dubai’s new economy agenda, fostering secure and sustainable growth.
Understanding Virtual Assets:
These are digital representations of value that can be exchanged, transferred, or used as a means of exchange/payment or investment. This encompasses virtual tokens and any digital representation of value determined by VARA.
- Promote Dubai as a global hub for virtual assets.
- Encourage investment and innovation.
- Attract industry companies.
- Create regulations and combat illegal practices.
- Regulate platforms and service providers.
Guidelines for pre-existing companies: all activities related to virtual assets in Dubai must first “register” with VARA. They must then obtain a NOC (No Objection Certificate) to continue operations or actively transition to a regulated license. Following this, they must obtain a NOC to continue operations or actively transition to a regulated license. VASPs complete an initial questionnaire and submit it to the competent authority, which assesses completeness.
- Steps’ Overview for pre-existing companies in the process of obtaining VARA licence:
- VARA registration
- NOC acquisition / Transition to regulated license
- Completion and submission of the initial questionnaire
- Evaluation by the competent authority
- VARA’s assessment and decision
Guidelines for new companies: initial approval facilitates company formation but does not authorize actual operation. A commercial license, in addition to VARA’s, is required. The responsibility for issuing the commercial license lies with the relevant authorities, contingent on VARA’s approval. Companies have one year to meet these requirements.
After receiving Initial Approval, a company can apply for a VASP License:
- Prepare and submit documentation as per VARA’s instructions.
- Receive feedback directly from VARA, which may include meetings, interviews, and additional documents.
- Pay the remaining license fees and first-year supervision fees.
- Receive a VASP License, subject to operational conditions.