The Ministry of Finance has announced the issuance of Cabinet Decision No. (127) of 2024, expanding the application of the Reverse Charge Mechanism to include precious metals and stones among VAT-registered businesses in the UAE.
This decision repeals the earlier Cabinet Decision No. (25) of 2018 on the application of VAT on gold and diamonds among registered dealers.
New VAT rules for metals and jewellery
The ministry clarified that the reverse charge mechanism’s scope has been expanded to include precious metals (gold, silver, palladium, and platinum), precious stones (natural and manufactured diamonds, pearls, rubies, sapphires, and emeralds), as well as jewellery made from any of these precious metals or stones, provided that the value of the precious metals or stones exceeds the value of other components.
This expansion, under the conditions outlined in Cabinet Decision No. (127) of 2024, aims to bring significant benefits to the precious metals and precious stones trading sector in the country.
Under the new provisions, VAT-registered suppliers will no longer be responsible for charging and collecting VAT on supplies of goods covered by the decision to VAT-registered customers, as long as the stipulated conditions are met. Instead, the VAT-registered customer will be responsible for calculating and declaring the VAT on their purchases of these goods and reporting it in their VAT return.
The ministry emphasised that the new decision is a step in the right direction, reflecting the government’s ongoing commitment to supporting the precious metals and gemstones trading sector in the country.
With these improvements to VAT regulations, the Ministry of Finance reaffirms its commitment to creating a strong regulatory framework that supports business growth and prosperity while keeping abreast of global best practices.
tanvir@dubainewsweek.com
