UAE To Apply Reverse VAT Charge On Scrap-metal Trading From January 2026

Cabinet Decision No. 153 of 2025 provides for the application of the reverse charge mechanism on eligible metal-scrap transactions between VAT-registered entities, under the provisions of the UAE’s VAT law and its executive regulations.

The Ministry of Finance said the measure is part of broader efforts to enhance the efficiency of the tax system, combat fraudulent practices in the scrap-metal trading sector and promote tax fairness and voluntary compliance, while safeguarding the competitiveness of the UAE’s business environment.

UAE scrap metal VAT reverse charge

Under the reverse charge mechanism, responsibility for accounting for VAT shifts from the supplier to the buyer in qualifying transactions. This applies whether the buyer is purchasing scrap metal for resale or for use in processing or manufacturing new products. Suppliers will no longer charge VAT on these supplies, with the buyer instead accounting for the tax due and fulfilling all related obligations.

The decision sets out clear procedural requirements for both parties before a supply takes place. Buyers must provide a written declaration confirming that the scrap metal is being acquired for resale or processing purposes and that they are registered with the Federal Tax Authority. Suppliers are required to obtain and retain these declarations, verify the buyer’s VAT registration, and clearly state on the invoice that the reverse charge mechanism applies.

According to the Ministry, the new framework is expected to significantly reduce tax fraud and improve the efficiency of VAT refund administration within the metal-scrap trading sector. It follows the successful implementation of similar reverse charge measures in sectors such as electronic devices, gold and other precious metals.

The Ministry added that the decision aligns with the UAE’s vision of building an integrated and transparent financial framework that enhances sustainability and trust in the tax system.