The UAE Ministry of Finance (MoF) has issued Cabinet Decision No. 153 of 2025, regarding the application of the reverse charge mechanism on trading of metal-scrap between registrants in the UAE, effective from 14th January 2026.
The measures taken pursuant to the provisions of Federal Decree Law No. 8 of 2017 on Value Added Tax and its amendments, and Cabinet Resolution No. (52) of 2017 Regarding the Executive Regulations of the said Decree Law.
The decision supports government efforts to strengthen tax system efficiency, combat fraud in the metal-scrap trading sector, and promote tax fairness, transparency, and voluntary compliance while safeguarding the UAE’s competitive business environment.
Under the decision, the reverse-charge mechanism will apply to eligible supplies between VAT-registered entities in the metal-scrap sector, shifting VAT accounting responsibility from the supplier to the buyer in specific cases to improve operational efficiency.
Accordingly, buyers purchasing metal-scrap for resale or processing will be responsible for accounting for and paying the VAT due, while suppliers will no longer charge VAT on such supplies. The decision also requires both suppliers and recipients to meet specific procedural obligations prior to the supply date.
The procedures require the recipient of the goods to provide a written declaration to the supplier confirming that the metal-scrap is being acquired for resale or processing and that the recipient is registered with the Federal Tax Authority (FTA). Suppliers must obtain and retain these declarations, verify the recipient’s FTA registration, and clearly state on invoices that the reverse charge mechanism applies.
The new mechanism is expected to significantly reduce tax fraud and improve the efficiency of tax refund administration in the metal-scrap trading sector. This approach follows the successful implementation of similar measures in sectors such as electronic devices, gold, and other precious metals.
The decision also aligns with the UAE’s vision to build an integrated financial framework that enhances transparency, sustainability, and trust in the tax system.
