On 19 December 2025, the UAE Ministry of Finance (MoF) announced the issuance of Cabinet Decision No. 153 of 2025, introducing a Reverse Charge Mechanism (RCM) for Value-Added Tax (VAT) on the local trading of metal scrap between VAT-registered persons in the UAE, effective 14 January 2026.
Pursuant to the Decision, the obligation to account for, VAT on qualifying supplies of metal scrap shifts from the supplier to the recipient subject to the conditions prescribed below:
- Recipients (buyers) who are VAT-registered and intend to resell or process the metal scrap or manufacturing must account for the VAT due and fulfil all related tax obligations.
- Supplierswill not charge VAT on these supplies and will no longer be responsible for accounting for VAT on such transactions provided that the statutory conditions for application of the reverse charge mechanism are satisfied.
The application of the reverse charge mechanism subject to completion of specific procedural requirements before the date of supply, including written declarations by the recipient confirming the transaction purpose and VAT registration, and verification and retention of these declarations by the supplier.
The Decision is issued pursuant to Federal Decree-Law No. 8 of 2017 on VAT and its Executive Regulations, and aims to enhance tax system efficiency, combat VAT evasion and fraud in the metal-scrap sector, promote tax fairness and voluntary compliance, and support the competitiveness of the UAE’s business environment.
Our team advises businesses on VAT compliance and tax risk management, including transaction structuring, documentation, and managing regulatory exposure under UAE tax laws. For further information, please contact Suneer Kumar at suneer@alsuwaidi.ae, Vida Grace Serrano at vida@alsuwaidi.ae, or Mamdouh Tawfik at m.tawfik@alsuwaidi.ae.