The Ministry of Finance declared on Friday that it is extending the use of the reverse charge mechanism to firms in the United Arab Emirates that are registered for VAT and that deal with precious metals and stones.
Cabinet Decision No. (127) of 2024, which broadens the use of the reverse charge mechanism, was announced by the Ministry. The previous Cabinet Decision No. (25) of 2018 regarding the application of VAT on gold and diamonds among registered dealers is subsequently repealed.
VAT-registered companies that supply items covered by this decision are exempt from charging or collecting VAT from other VAT-registered clients under the new requirements. The buyer is now in charge of calculating, declaring, and reporting the VAT on their tax returns.
The revised regulations are applicable to:
Precious metals: ladium, platinum, silver, and gold
Precious stones - Natural and artificial diamonds, pearls, rubies, sapphires, and emeralds
Jewelry: Things crafted from these valuable metals or stones.
This is given that the stones or precious metals are worth more than the other component.
The"reverse charge mechanism" is a VAT law that requires the buyer, not the supplier, to report and pay the government. Although the seller must make sure the customer satisfies the requirements for this mechanism, they do not charge VAT on the sale.
