The UAE VAT reverse charge on metal scrap moves responsibility for accounting VAT from the supplier to the registered buyer when metal scrap is traded between VAT registrants for resale or processing. It is set out in Cabinet Decision No. 153 of 2025, issued on 14 November 2025 and effective from 14 January 2026. Abdelhamid & Co (MOE LC0106-01, FTA TAN 30003958) advises Dubai and Sharjah recyclers.
What Cabinet Decision 153 of 2025 Introduces
Cabinet Decision No. 153 of 2025 applies the reverse charge mechanism to the trade of metal scrap between persons registered for VAT in the UAE. It was issued on 14 November 2025 and comes into force 60 days later, on 14 January 2026. The decision sits within the UAE VAT framework built on Federal Decree-Law No. 8 of 2017 and the Executive Regulation (Cabinet Decision No. 52 of 2017), and follows the same logic the UAE applied to precious metals.
Key Definitions and Dates
| Item | Detail under CD 153 of 2025 |
|---|---|
| Metal scrap | Waste of ferrous or non-ferrous metals that has commercial value and is usable after processing |
| Processing | Converting scrap into materials usable to manufacture new products — by repair, recycling or any other method |
| Issue date | 14 November 2025 |
| Effective date | 14 January 2026 (60 days after publication) |
How the Reverse Charge Works for Scrap
Where a supplier supplies metal scrap to a VAT-registered recipient, and the recipient intends to resell it or use it in processing, Article 2 provides that the supplier does not account for VAT on the supply and does not record it in its return, while the recipient becomes responsible for the VAT due on that supply and all related tax obligations. The registered buyer self-accounts output VAT and recovers input VAT under the normal rules.
Example: a Sharjah scrap yard sells mixed steel offcuts to a Dubai steel re-roller. The yard issues an invoice without charging VAT; the re-roller declares the VAT under reverse charge in its return. The same applies to a recycler buying aluminium or copper scrap for melting.
Conditions and the Mandatory Invoice Statement
Before the supply date the recipient must give the supplier a written declaration stating that the scrap is acquired for resale or processing, and confirming that the recipient is VAT-registered. The supplier must receive and keep those declarations, verify the recipient's registration through FTA-approved means, and — importantly — the invoice must contain an explicit statement that the reverse charge applies. If the recipient does not provide the declarations, the reverse charge does not apply and ordinary VAT resumes.
When the Reverse Charge Does Not Apply
The mechanism does not apply where the supply of metal scrap is zero-rated under Article 45(1) of Federal Decree-Law No. 8 of 2017, such as qualifying exports. It also does not apply to sales to non-registered buyers, where standard 5% VAT continues to be charged in the usual way.
Common Mistakes and Risks
The frequent pitfalls are omitting the explicit reverse-charge statement from the invoice, missing the pre-supply declaration, treating sales to unregistered buyers as reverse-charge, and confusing scrap "processing" with simple resale. With effect from 14 January 2026, errors can trigger penalties. A short VAT compliance review before that date keeps a scrap or recycling business clean.
Why Choose Abdelhamid & Co
We are a Sharjah-based, Ministry of Economy licensed firm (LC0106-01) and FTA-registered Tax Agency (TAN 30003958, TAAN 20033908). We help metal-scrap dealers, recyclers and steel mills across Dubai, Sharjah, Ajman and the UAE update invoice templates, build declaration controls, and file correct VAT returns — bilingually in Arabic and English.
When does the UAE VAT reverse charge on metal scrap start?
Cabinet Decision No. 153 of 2025 was issued on 14 November 2025 and is effective from 14 January 2026, sixty days after publication. Scrap and recycling businesses in Dubai and Sharjah should update their processes before that date.
What counts as metal scrap under CD 153 of 2025?
Metal scrap is waste of ferrous or non-ferrous metals that has commercial value and is usable after processing. Processing means converting scrap into materials usable to manufacture new products through repair, recycling or any other method.
Does the invoice need a special note for the metal scrap reverse charge?
Yes. Under CD 153 of 2025 the invoice must contain an explicit statement that the reverse charge applies, in addition to the buyer's pre-supply written declaration and the supplier's verification of the buyer's VAT registration.
Does the metal scrap reverse charge apply to unregistered buyers?
No. The reverse charge applies only where the buyer is VAT-registered and intends resale or processing. Sales to non-registered buyers continue to carry standard 5% UAE VAT charged by the supplier.
Related Services
- VAT Compliance Review — scrap invoicing and declaration controls
- VAT Return Filing — accurate reverse-charge reporting
- VAT Registration — registration support for new scrap traders
For the official legislation see the Federal Tax Authority and the Ministry of Finance, or read more on our Insights page.