The UAE VAT reverse charge on precious metals shifts responsibility for accounting VAT from the supplier to the registered buyer when precious metals and precious stones are supplied between VAT registrants for resale or production. It is set out in Cabinet Decision No. 127 of 2024 and replaces the earlier gold-and-diamond rule. Abdelhamid & Co (MOE LC0106-01, FTA TAN 30003958) advises Dubai and Sharjah traders on it.
What Cabinet Decision 127 of 2024 Covers
Cabinet Decision No. 127 of 2024 applies the reverse charge mechanism to precious metals and precious stones traded between persons registered for VAT in the UAE. It repeals Cabinet Decision No. 25 of 2018, which had applied a narrower reverse charge only to gold and diamonds. The new decision widens the net and modernises the documentation conditions. It operates within the UAE VAT framework under Federal Decree-Law No. 8 of 2017 and the Executive Regulation (Cabinet Decision No. 52 of 2017).
Which Goods Are In Scope
The decision defines the "Goods" precisely, which matters for every Dubai Gold Souk wholesaler and Sharjah jewellery maker:
| Category | Definition under CD 127 of 2024 |
|---|---|
| Precious metals | Gold, silver, palladium and platinum |
| Precious stones | Natural and manufactured (synthetic) diamonds, pearls, rubies, sapphires and emeralds |
| Jewellery | Items made of precious metals or stones, where the value of the precious metal or stone exceeds the value of the other components |
The "value test" for jewellery is key: a gold ring with a small steel pin is in scope because the gold value dominates; a base-metal watch with a tiny diamond accent is likely outside scope because the precious-stone value does not dominate.
How the Reverse Charge Works
Where a supplier supplies in-scope Goods to a VAT-registered recipient, and the recipient intends to resell the Goods or use them to produce or manufacture other Goods, the rules in Article 2 apply: the supplier does not charge VAT and does not record the output tax in its return, and the recipient becomes responsible for accounting the VAT due on the supply and for all related tax obligations. The registered buyer self-accounts the output VAT and, subject to the normal rules, recovers it as input VAT — often producing a nil cash effect.
Example: a Sharjah refiner sells gold bars to a Dubai jewellery manufacturer that will turn them into rings. The refiner issues an invoice without charging VAT; the manufacturer declares the VAT under reverse charge in its own return. Cash flow is preserved across the trade.
Conditions and Documentation
The reverse charge is not automatic. Before the date of supply the recipient must provide the supplier with a written declaration confirming (1) that the Goods are acquired for resale or for production/manufacturing, and (2) that the recipient is registered for VAT. The supplier must receive and keep those declarations and verify that the recipient is registered using the means approved by the FTA. If the declarations are not provided, the reverse charge does not apply and normal VAT rules resume.
When the Reverse Charge Does Not Apply
The mechanism does not apply where the supply of the Goods is zero-rated under Article 45(1) of Federal Decree-Law No. 8 of 2017 — for example, certain exports or investment-grade precious metals taxed at 0%. It also does not apply to supplies to non-registered buyers or to retail sales to final consumers, where ordinary 5% VAT continues.
Common Mistakes and Risks
Typical errors include applying the reverse charge to retail consumer sales, missing the pre-supply written declaration, failing to verify the buyer's VAT registration, and misjudging the jewellery "value test". Each can lead to under-declared output tax and penalties. A focused VAT compliance review of your sales process protects margins in a high-value trade.
Why Choose Abdelhamid & Co
As a Sharjah-based, FTA-registered Tax Agency (TAN 30003958, TAAN 20033908) and Ministry of Economy licensed firm (LC0106-01), we advise gold, jewellery and precious-stone businesses across Dubai, Sharjah and the UAE. We design compliant declaration templates, review invoicing, and represent registrants before the FTA, working in both Arabic and English.
Does the UAE VAT reverse charge on precious metals apply to retail sales?
No. Cabinet Decision No. 127 of 2024 applies the reverse charge between VAT registrants where the buyer intends resale or production. Ordinary 5% VAT continues on retail sales to final consumers and on supplies to non-registered buyers.
What goods are covered by Cabinet Decision 127 of 2024?
Gold, silver, palladium and platinum; natural and synthetic diamonds, pearls, rubies, sapphires and emeralds; and jewellery made of these where the precious metal or stone value exceeds the value of the other components.
What documents are needed for the precious metals reverse charge?
Before the supply, the buyer must give the supplier a written declaration that the goods are for resale or production and that the buyer is VAT-registered. The supplier must keep the declaration and verify the buyer's registration with the FTA.
Did CD 127 of 2024 replace the old gold and diamond rule?
Yes. It repeals Cabinet Decision No. 25 of 2018, which covered only gold and diamonds, and extends the reverse charge to a broader list of precious metals and precious stones across the UAE.
Related Services
- VAT Compliance Review — reverse-charge process review for traders
- Tax Agency Service — FTA representation for gold and jewellery firms
- VAT Voluntary Disclosure — correcting past reverse-charge errors
For the official legislation see the Federal Tax Authority and the Ministry of Finance, or read more on our Insights page.