New UAE VAT Rules for Precious Metals & Stones: The Reverse Charge Explained

If you trade gold, silver, platinum, diamonds, gemstones or jewellery in the UAE, the VAT treatment of your business-to-business supplies changed on 26 February 2025. The reverse charge mechanism on precious metals and stones under Cabinet Decision No. 127 of 2024 shifts responsibility for VAT from the supplier to the registered buyer on a much wider range of goods than before. This guide explains the rules in full and links you to professional VAT filing from AED 149 when you want the returns handled for you.

The decision was issued on 16 December 2024, published in the Official Gazette, and took effect on 26 February 2025. It works within the VAT framework of Federal Decree-Law No. 8 of 2017 and its Executive Regulation, and its Article 2 mirrors the earlier electronic-devices reverse charge (Cabinet Decision No. 91 of 2023) — a deliberately consistent approach by the UAE legislator.

What are the new VAT rules for precious metals and stones?

The new rules apply the domestic reverse charge to supplies of precious metals, precious stones and related jewellery between VAT-registered persons in the UAE, provided the buyer intends resale or production. The supplier stops charging VAT on those supplies; the buyer self-accounts for it. This replaced Cabinet Decision No. 25 of 2018, which only covered gold and diamonds.

The aim is to ease cash flow for the sector and align the UAE with international best practice on high-value goods. For traders, the headline is simple: on qualifying B2B supplies you no longer collect and remit 5% VAT — but you must get the documentation exactly right, because the reverse charge only applies when every condition is met.

How does the reverse charge mechanism work here?

Under a reverse charge, the normal flow of VAT is inverted. Instead of the supplier charging VAT, collecting it and paying it to the FTA, the registered buyer accounts for the VAT directly on their own return. The supplier issues a tax invoice with no VAT and a statement that the buyer is liable under the reverse charge.

The buyer then records the 5% as output VAT and, where entitled, claims the same 5% as input VAT. For a fully taxable business the two entries cancel out, so no cash actually changes hands for the VAT — the mechanism is cash-flow neutral and removes the working-capital drag of paying VAT upfront and reclaiming it later.

Which goods are in scope ("Precious Goods")?

The decision defines the goods precisely, and the definition is wider than the old regime. In scope are precious metals (gold, silver, palladium and platinum), precious stones (natural and manufactured/synthetic diamonds, pearls, rubies, sapphires and emeralds), and jewellery made from these — provided the value of the precious metal or stone exceeds the value of the other components.

That “value test” for jewellery is decisive. A gold ring with a tiny steel pin is in scope because the gold value dominates; a base-metal fashion watch with a small diamond accent is likely outside scope because the precious-stone value does not dominate. Getting the principal-component judgement right on mixed items is where errors creep in.

What supplies are excluded from the reverse charge?

Not every precious-goods transaction is caught. The reverse charge applies only to standard-rated supplies between VAT registrants. Several important categories fall outside it.

Investment-grade bullion of 99% purity or higher that is tradable on global markets is zero-rated and continues to be treated as such — the reverse charge does not touch it. Zero-rated exports (direct or indirect) remain zero-rated. Retail sales to final consumers and any supply to a buyer who is not VAT-registered stay under ordinary 5% VAT. And the regime does not apply retrospectively — supplies whose date of supply falls before 26 February 2025 follow the old rules.

What conditions must be met to apply the reverse charge?

All conditions must be satisfied — miss one and the supplier is back to charging 5% VAT. First, both parties must be VAT-registered in the UAE. Second, the buyer must intend to resell the goods or use them to produce or manufacture precious goods. Third, the buyer must give the supplier a written declaration to that effect before the date of supply. Fourth, the supplier must verify the buyer's VAT registration and retain the declaration as evidence.

The written declaration is the pivot of the whole regime. If it is missing, or provided after the supply, the reverse charge does not apply and standard VAT is due. This is why a compliant, dated declaration template collected at the right moment is essential for gold and jewellery wholesalers.

How are making and manufacturing charges treated?

FTA clarification VATP043 (which replaced VATP032) sets out how to treat “making services” such as assembling or crafting jewellery. The treatment depends on how you invoice. Where a supplier charges a single price for goods plus making services and all reverse-charge conditions are met, it can be treated as a single composite supply subject to the reverse charge in full.

Where the goods and making charges are invoiced separately, they are multiple supplies: only the goods qualify for the reverse charge, while the making service remains standard-rated at 5%. Suppliers must therefore decide, and document, whether each transaction is a composite or multiple supply, and apply the right treatment to each component — a frequent source of assessment risk.

How do you report the reverse charge on your VAT return?

As the buyer, you self-account for the VAT. You declare 5% output VAT on the value of the qualifying goods in your VAT return and, where the goods are used for taxable business purposes, you recover the same 5% as input VAT in the same return. For a fully taxable trader these entries offset and the net VAT effect is zero.

As the supplier, you report the supply value but no output VAT on those transactions, and you keep the buyer's declaration and evidence of their registration on file. Correct box treatment matters — misreporting is a common trigger for FTA queries, and this is exactly the kind of accuracy our VAT return filing service is built to deliver. If you are not yet registered but now must be, start with VAT registration from AED 199.

Worked example: a gold jewellery wholesale supply

A Dubai wholesaler supplies gold jewellery worth AED 500,000 to a VAT-registered retailer who will resell it. The retailer provides a written declaration before the supply. Both are VAT-registered, so the reverse charge applies.

Under the reverse charge the retailer pays AED 25,000 less cash at the point of purchase, and the AED 25,000 output and input VAT cancel out in the same return. Multiply that across a fast-moving gold inventory and the working-capital benefit is substantial — provided the declaration and invoicing are compliant.

What changed compared with Cabinet Decision 25 of 2018?

The old rule (Cabinet Decision No. 25 of 2018) applied a narrow reverse charge only to gold and diamonds. Cabinet Decision No. 127 of 2024 repealed it in full and widened the net to a broad list of precious metals, stones and jewellery, while modernising the documentation conditions.

Compliance, documentation and penalties

The reverse charge lightens the VAT collection burden but raises the documentation bar. Suppliers must issue compliant tax invoices, collect and retain each buyer's written declaration, verify VAT registration, and keep clear records distinguishing reverse-charge supplies from standard-rated retail sales. Buyers must self-account accurately and keep the same evidence.

Getting it wrong is costly. If a supplier applies the reverse charge without the conditions being met, the FTA can reassess the VAT that should have been charged, deny input recovery, and impose penalties. Late VAT filing carries a penalty of AED 1,000 for a first offence and AED 2,000 for a repeat within 24 months; late payment is charged at 14% per annum, monthly, under Cabinet Decision No. 129 of 2025 (effective 14 April 2026). Where a past return contained an error above AED 10,000, a voluntary disclosure (Form VAT 211) is required. If in doubt, a compliance and VAT review before your next filing is the cheapest insurance.

What should precious-goods traders do now?

Act on four fronts. First, review your contracts and invoicing so B2B supplies of in-scope goods carry the correct reverse-charge wording and retail sales still show 5% VAT. Second, put a compliant written-declaration template in place and collect it before every qualifying supply. Third, train your billing staff on the principal-component value test and on composite vs multiple supplies for making charges.

Fourth, reconcile your VAT returns so reverse-charge output and input entries are correctly reported and offsetting. If your accounting systems were built around the old gold-and-diamonds rule, they need updating. Fastlane supports gold, jewellery and gemstone businesses across Dubai and the wider UAE with declaration templates, invoice reviews, VAT-return preparation and FTA representation — talk to us before your next return is due.

Key terms used in this guide