UAE introduces new VAT regulations, expands reverse charge mechanism for precious metals and jewellery

The UAE Ministry of Finance introduces expanded VAT regulations under Cabinet Decision No. (127) of 2024, extending the reverse charge mechanism to precious metals, stones, and jewellery simplifying VAT reporting and reduces administrative burdens.

Abu Dhabi: The UAE Ministry of Finance has announced a significant update to its VAT regulations, expanding the application of the reverse charge mechanism to cover precious metals, stones, and jewellery. This change comes under Cabinet Decision No. (127) of 2024, which repeals the earlier Cabinet Decision No. (25) of 2018 that applied only to gold and diamonds.

Under the new provisions, VAT-registered businesses supplying goods such as gold, silver, palladium, platinum, diamonds (both natural and manufactured), pearls, rubies, sapphires, and emeralds no longer need to charge or collect VAT from other VAT-registered customers. Instead, the responsibility for calculating, declaring, and reporting VAT shifts to the buyer. This rule applies only if the value of the precious metals or stones exceeds that of other components in the product.

The reverse charge mechanism is a VAT rule where the buyer, rather than the seller, is responsible for reporting and paying VAT to the government. Sellers are not required to charge VAT on transactions but must ensure that buyers meet the necessary conditions to qualify for the mechanism.

This broader application of the reverse charge mechanism is aimed at simplifying VAT compliance for businesses in the precious metals and stones trading sector. By reducing administrative burdens, the new rules enable businesses to focus more on their core operations. The Ministry of Finance highlighted that this decision aligns with global best practices and reflects the government’s commitment to supporting the growth of this vital sector.

The updated VAT framework is expected to significantly benefit the UAE’s precious metals and gemstones trading sector. It creates a robust regulatory environment that fosters business growth and prosperity while enhancing the country’s competitiveness on the global stage. The Ministry emphasized that this decision is a step forward in positioning the UAE as a leading hub for precious metals and stones trading.

The updated rules also reinforce the government’s dedication to creating a business-friendly environment that supports the sector’s long-term growth. By streamlining VAT processes, the UAE aims to attract more businesses to its trading sector, further boosting its contribution to the national economy.

This regulatory change underscores the UAE’s commitment to maintaining a competitive edge in global markets while ensuring compliance with international standards. The Ministry of Finance reiterated its pledge to support the trading sector through continuous improvements to the regulatory framework, promoting prosperity and sustainable growth in the industry.

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