New Rules for VAT Reverse Charge on Precious Metals and Stones

Effective February 25, 2025, Cabinet Decision No. 127 of 2024 on the Application of the Reverse Charge Mechanism to Precious Metals and Stones Gemstones among those registered in the State for VAT purposes will come into force. This decision repeals Cabinet Decision No. 25 of 2018 Mechanism of Applying Value Added Tax on Gold and Diamonds between Registrants in the State.

Under Article 48 of Federal Decree-Law No. 8 of 2017 on Value Added Tax, the reverse charge mechanism shifts the tax liability from the supplier to the recipient of goods. The recipient is obligated to calculate and pay the tax due on the received goods or services independently.

The new decision introduces the following changes:

• Removal of joint liability for suppliers: Suppliers are no longer liable for tax obligations if the recipient is not registered for VAT purposes.
• Restriction of reverse charge application cases: The reverse charge mechanism is now limited to paragraph 1 of Article 45 of Federal Decree-Law No. 8 of 2017 on Value Added Tax, provided the supply of goods is subject to a 0% VAT rate.

Requirement for a written declaration: Rec...