Metal scrap between VAT registrants: the buyer accounts for the VAT

Cabinet Decision No. 153 of 2025 moved VAT on domestic metal scrap sales from the seller to the buyer. The rule has applied to supplies made on or after 14 January 2026. The FTA’s public clarification VATP047, published in October 2026, sets out which goods and which deals it covers, and what each side has to do before the sale.

What changes

• The seller does not charge VAT on the sale and does not report it in its VAT return.
• The buyer accounts for the VAT under the reverse charge. It reports the purchase in Box 3 of its return and recovers the VAT it is entitled to in Box 10, not in Box 9.
• The rule covers ferrous and non-ferrous metal waste that has commercial value and can be used after processing. Paper, plastic, glass, textile, rubber and organic waste stay under the normal VAT rules.
• It applies only when both sides are VAT registrants and the buyer intends to resell the scrap or process it into material for new products. Scrap bought for the buyer’s own repairs or maintenance is outside the rule.
• Exports of metal scrap are excluded. Where the zero-rating conditions are met, they are reported as zero-rated supplies.

What to do

1. If you buy metal scrap, give the seller two written declarations before each supply: that you are VAT registered, with your TRN, and that you are buying to resell or process. One document can carry both.
2. If you sell metal scrap, keep those declarations, check the buyer’s TRN with the TRN verification tool on the FTA website, and state clearly on the tax invoice that the reverse charge applies.
3. Without the declarations, the sale is taxed at 5% in the normal way: the seller reports it in Box 1, and the buyer cannot recover that VAT.

What this means for you

For a trader or recycler of metal scrap, both the invoice template and the VAT return change. A seller who keeps charging 5% after 14 January, or a buyer who never sent the declarations, ends up with VAT that has to be corrected. If your business only uses metal in its own work and does not trade in scrap, nothing changes.

How QuickTax helps

We set your chart of accounts up to handle standard-rated, zero-rated, exempt and reverse-charge supplies correctly, so your returns hold up. Our guide to reverse charge, zero-rated and exempt supplies explains how the reverse charge works. See also how our accounting and tax service works.

This update is for reference and is not tax advice. Source: FTA public clarification VATP047, Application of the Reverse Charge Mechanism on Metal Scrap trading among UAE VAT Registrants, which clarifies Cabinet Decision No. 153 of 2025.