The UAE Federal Tax Authority (FTA) has issued a new clarification VATP043, replacing VATP032: expanding the Reverse Charge Mechanism (RCM) to a wider category of high-value items traded between VAT-registered businesses.
Effective from 15 February 2025, the following are now included under the RCM:
- Precious metals – gold, silver, palladium, platinum
- Precious stones – diamonds (natural and synthetic), pearls, rubies, sapphires, emeralds
- Jewelry where the value of the precious materials exceeds other components
What changes for businesses?
- Suppliers will no longer charge VAT on these transactions.
- Buyers (if VAT-registered) must self-account for VAT.
- A written declaration is mandatory from the buyer confirming:
- Suppliers will no longer charge VAT on these transactions.
- Buyers (if VAT-registered) must self-account for VAT.
If these conditions aren’t met, RCM won’t apply, and the VAT burden stays with the supplier, affecting compliance and input tax claims.
Key Actions:
- Revisit supply agreements
- Ensure teams understand declaration requirements
- Verify TRNs and invoice formats are compliant
This change brings significant implications for businesses dealing in precious materials. Review your processes to stay aligned with the updated FTA guidance.
