Worked position · Ungated · Computed live
A Free Zone trading company disposing of a mixed token position
What tax is due on these disposals — and how much does the answer move depending on which lots are treated as sold?
The facts
- A Qualifying Free Zone Person holding one token acquired across three purchases.
- An early lot bought cheaply more than twelve months before the disposals.
- A later lot bought at a higher price inside the twelve-month window.
- Two disposals in the period, one of them to a counterparty who is a natural person.
The amounts and dates are illustrative. The lot matching, the twelve-month test, the de minimis interaction and the tax are computed live by the same engine the Virtual-Asset Disposals service calls.
The same facts under every convention
LIFO — last in, first out produces the smallest gain — and FIFO — first in, first out produces the smallest tax bill. They are not the same convention. Minimising the gain does not minimise the tax, because for a Qualifying Free Zone Person the holding period decides what can be Qualifying Income, and a small gain realised inside twelve months is taxed while a larger one held beyond it may not be.
| Convention | Total gain | Held ≥ 12 months | Taxable |
|---|---|---|---|
| FIFO — first in, first out | AED 4,653,167 | AED 3,420,500 | AED 1,232,667 |
| LIFO — last in, first out | AED 2,562,500 | AED 670,679 | AED 1,891,821 |
| Specific identificationNot evidenced: no lot ids supplied on one or more disposals. | Not available on these facts | ||
| Weighted average | AED 3,612,833 | AED 2,195,111 | AED 1,417,722 |
The position on the elected method
- Proceeds
- AED 6,439,500
- Cost basis
- AED 1,786,333
- Gain
- AED 4,653,167
- Held ≥ 12 months — capable of Qualifying Income
- AED 3,420,500
- Taxable base
- AED 1,232,667
- Corporate Tax
- AED 77,190
QFZP claimed: gain on parcels held ≥ 12 months is treated as capable of Qualifying Income (0%); the remainder is taxed at 9% above the AED 375,000 band.
What this does not decide
The verdict is ASSESS. Specific identification is listed as unavailable rather than computed, because it requires lots the taxpayer can EVIDENCE were the ones sold — a records question, not an arithmetic one. An engine that picked a convention here would be choosing the taxpayer’s position for them.
MD 229 Art. 3: non-qualifying revenue must not exceed the lower of 5% of total revenue (AED 1,500,000) or AED 5,000,000.