The UAE Federal Tax Authority has released Public Clarification VATP043 on 30 April 2025, which addresses the application of the reverse charge mechanism for Value Added Tax (VAT) on transactions involving precious metals and precious stones between registered businesses within the country.

This update explains Cabinet Decision No. 127 of 2024, which broadens the scope of the domestic reverse charge to cover these items and takes effect from 26 February 2025. VATP043 supersedes the earlier guidance VATP032, which was limited to gold and diamond supplies.

Cabinet Decision No. 127 of 2024 was issued to replace Cabinet Decision No. 25 of 2018. It expands the scope of goods on which the domestic reverse charge applies to include, in addition to gold, diamonds and jewellery made thereof, other specified precious metals, precious stones and jewellery made thereof, provided that the value of such precious metals or precious stones is higher than the value of other components.

The specified precious metals are gold, silver, palladium and platinum. The specified precious stones are diamonds (natural and manufactured/synthetic), pearls, rubies, sapphires and emeralds.

The following conditions must be satisfied for application of the domestic reverse charge on the supply of Precious Goods:

  • The Recipient of the Precious Goods (“Recipient”) must be registered for VAT in the UAE.
  • The Recipient must intend to resell the Precious Goods or use them to produce or manufacture Precious Goods.
  • The Recipient must provide a written declaration before the date of supply confirming the following:
    • the Recipient is registered for VAT in the UAE, and
    • the Recipient intends to resell the Precious Goods or use them in the production or manufacturing of Precious Goods.
  • The supplier must, before the date of supply, receive and keep the declaration from the Recipient and verify that the Recipient is registered for VAT (via the FTA’s approved means).

The application of the reverse charge mechanism is restricted to the supply of the Precious Goods and does not extend to Services for the making/manufacturing of jewellery, unless the Services are part of a single composite supply of Precious Goods.

The Cabinet Decision is effective from 26 February 2025.