Corporate Tax Loss Carryforward and Company Regulation Under UAE Law: Rethinking the Tax Accounting Treatment of VirtualAssets—A Comparative Study

Vollständiger Abstract

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This article re-examines corporate tax loss carryforward and company regulation under United Arab Emirates law as applied to virtual assets. It uses Egypt as one functional benchmark among several, alongside the United States, the United Kingdom, Singapore, the European Union, and OECD reporting standards. The study asks whether the UAE’s general loss architecture—especially Articles 37–40 of Federal Decree-Law No. 47 of 2022—can address transaction-level problems involving classification, realization, valuation, beneficial ownership, custody, related parties, and evidentiary traceability without departing unnecessarily from tax neutrality. Using a doctrinal, comparative, and policy-oriented method, the article finds that the comparators generally apply ordinary tax categories while supplementing them with crypto-specific guidance, market supervision, and information reporting; they do not establish a general virtual-asset loss ring-fence. The UAE framework already contains substantial safeguards, including a 75% utilization cap, ownership and continuity conditions, transfer-pricing and anti-abuse rules, and the exclusion of exempt persons and Qualifying Free Zone Persons from Article 38 loss transfers. The identified concern is therefore a prospective institutional vulnerability rather than a demonstrated pattern of UAE abuse. The article’s original contribution lies in its UAE-focused synthesis and implementation architecture, not in originating the case for restricting crypto-losses. It proposes a neutrality-first, risk-triggered model: genuine losses remain subject to ordinary law, while enhanced proof and scrutiny apply where identifiable markers arise, including self-custody without reliable records, non-independent valuation, illiquid tokens, related-party crystallization, unlicensed platforms, abrupt ownership changes, acquisition of loss companies, or transactions lacking commercial purpose. Asset-class ring-fencing or special continuity rules should be considered only if future UAE evidence demonstrates that these technologically neutral safeguards are inadequate. This calibrated approach protects the tax base while preserving legal certainty, proportionality, and the UAE’s attractiveness as a digital-finance hub.