VAT: Domestic Reverse Charge for Domestic Supplies of Metal Scrap

The UAE Ministry of Finance (MoF) issued Cabinet Decision No. 153 of 2025 on 14 November 2025, effective from 14 January 2026, expanding the scope of the Reverse Charge Mechanism (RCM) to include domestic supplies of Metal Scrap.

Scope of Domestic RCM

Domestic RCM applies to local supplies of metal scrap, defined as ferrous or non-ferrous metal waste with commercial value that is usable after processing such as recycling or repair.

Applicability of the Decision

• VAT registered suppliers will no longer charge VAT on domestic supplies of metal scrap
• VAT registered customers must self-account for VAT under RCM
• RCM applies only when supplies are made to VAT registered customers
• Normal VAT rules apply for supplies to non-registered customers

Conditions to Apply Domestic RCM

Recipient Responsibilities:

• Provide written declaration confirming intent to resell or process the metal scrap
• Confirm VAT registration status to the supplier

Supplier Responsibilities:

• Obtain written declaration from the recipient
• Verify recipient’s VAT registration with the FTA
• Clearly mention application of domestic RCM on the invoice

Non-Compliance

• Supplier must charge VAT if declaration is not provided
• Recipient cannot recover input VAT without declaration

Conclusion

The expansion of domestic RCM to metal scrap reduces cashflow impact and strengthens VAT compliance, particularly in high-value industries.

Regards,
FAAB PARTNERS