UAE Reverse Charge Mechanism for Metal Scrap VAT
Everything buyers and sellers of metal scrap in the UAE need to know about the new VAT reverse charge rules effective 14 January 2026.
Important Disclaimer
This guide is for informational purposes only and does not constitute tax or legal advice. SellAnyScrap.ae is a facilitation platform and does not participate in trading activities. Please consult a qualified UAE tax advisor for advice specific to your situation.
What Changed and Effective Date
On 14 January 2026, a reverse charge mechanism for VAT on metal scrap trading came into effect in the UAE. This was introduced via Cabinet Decision No. (91) of 2024, which amends Cabinet Decision No. (52) of 2017 on the Executive Regulation of the Federal Decree-Law on Value Added Tax.
Key Change Summary
- A new Article 48 Bis 2 was added to the Executive Regulation
- Applies to supplies of metal scrap and metal scrap processing
- Both parties must be VAT-registered (taxable persons)
- VAT obligation shifts from supplier to recipient (buyer)
Definition of "Metal Scrap" and "Processing"
Metal Scrap
Recyclable materials consisting of metals and alloys, in different shapes, resulting from manufacturing, processing or consumption, which are no longer suitable for their original purpose and need to be reprocessed.
Processing
Any operation conducted to reprocess metal scrap such as cutting, pressing, shredding, or any other process necessary to transform it for further use or recycling.
The scope covers physical metal scrap and the processing services applied to it -- not non-metal recyclables like paper, plastic, or e-waste.
Who Accounts for VAT
Reverse Charge Flow
Supplier (Seller)
VAT-registered
Issues invoice with reverse charge statement
Does NOT charge VAT
Recipient (Buyer)
VAT-registered
Self-accounts for output VAT
Accounts for VAT in return
- The recipient (buyer) must account for and report VAT as output tax in their VAT return
- The supplier (seller) must not charge VAT on the tax invoice
- Both parties must be registered for VAT in the UAE (taxable persons)
- If the buyer is NOT VAT-registered, the normal VAT rules apply (supplier charges VAT)
Documentation Requirements
1. Written Declaration by Recipient
The recipient of the supply must provide a written declaration to the supplier before or at the time of supply, stating that they are a taxable person and will account for the VAT.
2. TRN Verification by Supplier
The supplier must verify the Tax Registration Number (TRN) provided by the recipient to confirm VAT registration status before applying the reverse charge.
3. Invoice Statement
The supplier's tax invoice must include a clear statement indicating that the recipient of the goods or services is obligated to account for VAT on this supply.
Official Source
For the full official announcement, refer to the Ministry of Finance press release:
Ministry of Finance AnnouncementFrequently Asked Questions
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