New Cabinet Decision on VAT Reverse Charge for Scrap Metal in UAE

In detail

Cabinet Decision No.153 of 2025 dated 4 November 2025 was published in official gazette dated 26 November 2025. In accordance with the provisions of the Decision, the effective date will be 60 days from the date of its publication in the official gazette, making it applicable from 25 January 2026.​

The Decision introduces a new framework for applying VAT through the reverse charge mechanism on the supply of scrap metal between VAT registered businesses with in the UAE. This approach shifts the responsibility for accounting for VAT from the supplier to the recipient, ensuring compliance and reducing administrative burden for businesses engaged in scrap metal transactions.​

Key aspects of the Decision and applicable conditions​

• Scope of the Decision: The reverse charge mechanism applies to transactions involving scrap metal, as defined under the Decision.​

• Mechanism: VAT-registered suppliers are not required to charge or collect VAT on supplies of scrap metal made to VAT registered customers who intend to resell or use the material in processing. Instead, the VAT registered customer must account for VAT under the reverse charge mechanism and report it in their VAT return.​

• ​Exclusion: The Decision does not apply to scrap metal supplies that qualify as zero-rated exports under UAE VAT law.​​

• Documentation: Businesses must maintain proper documentation to ensure compliance, including detailed records of transactions and VAT calculations in accordance with the Decision.​

Cabinet Decision 153 of 2025 – Key details ​

Key takeaways 

Taxable persons engaged in the supply of scrap metal should thoroughly review their existing supply chain arrangements to ensure compliance with Cabinet Decision No.153 of 2025. This includes assessing contracts, updating invoicing processes to reflect the reverse charge mechanism, verifying VAT registration status of counterparties, obtaining required written declarations, training internal teams on new requirements, and implementing robust controls for documentation and VAT reporting to avoid penalties and ensure smooth compliance.​

How PwC Middle East can support you​

• Navigate complexity: Our Tax specialists partner with businesses to ensure full compliance, leveraging technology-enabled solutions for efficiency and accuracy.​

• ​Minimise risk: We help implement robust processes to reduce exposure to penalties and safeguard operational continuity.​

• ​Resolve disputes: If penalties occur, our Tax Dispute and Litigation team provides expert support in managing appeals and resolving disputes swiftly and effectively.​