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UAE Clarifies Reverse Charge Mechanism on Local Metal Scrap Trading

The UAE Federal Tax Authority issued Public Clarification VATP047 regarding the reverse charge mechanism for domestic metal scrap transactions. Under the clarification, the VAT accounting obligation shifts from the supplier to the VAT-registered buyer. The guidance outlines mandatory documentation, supplier declarations, and verification rules for the industrial sector.

Published Source: Federal Tax Authority
Issuing authority
Federal Tax Authority
Jurisdiction
United Arab Emirates
Publication date
October 2, 2026
Stage
Final rule
Official document
Public Clarification VATP047
Official source
tax.gov.ae

The UAE Federal Tax Authority (FTA) has released Public Clarification VATP047 regarding the application of the reverse charge mechanism on local metal scrap transactions among UAE VAT registrants.

According to the FTA clarification, the liability to account for Value Added Tax shifts from the supplier to the VAT-registered recipient when trading scrap metals locally within the UAE.

The guidance establishes mandatory compliance obligations, including specific documentation requirements, supplier declarations, and verification conditions that transacting parties must fulfill and maintain.

The FTA stated that these measures aim to standardize tax treatment and prevent VAT non-compliance across the country's industrial and metals recycling sectors.

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