Legislation Details
- Full Title: Cabinet Resolution On the Application of Reverse Charge Mechanism to Precious Metals and Precious Stones Among Registrants in the State for Value-Added Tax Purposes
- Law Type: Cabinet Resolution
- Law Number: No. (127) of 2024
- Issued Date: 16 Dec 2024
- Effective Date: [The legislation does not specify]
- Official Gazette: No. 790
- Sector: Tax
- Status: Active
- Number of Articles: 12
- Chapters/Parts: 0
- Amendments: [The legislation does not specify]
Summary
This Cabinet Resolution establishes a reverse charge mechanism for the value-added tax (VAT) on the supply of precious metals, precious stones, and jewelry made from these materials among VAT-registered businesses in the UAE. It aims to simplify the VAT compliance process for these types of transactions and ensure the proper reporting and payment of VAT. The resolution is significant for businesses in the precious metals and gemstone trade, as it clarifies their VAT obligations and provides a streamlined approach to managing VAT on these supplies. (Cabinet Resolution On the Application of Reverse Charge Mechanism to Precious Metals and Precious Stones Among Registrants in the State for Value-Added Tax Purposes, 2024, Art. 1-5)
What is the scope and purpose of this law?
The purpose of this Cabinet Resolution is to apply a reverse charge mechanism for the VAT on the supply of "Goods" (defined as precious metals, precious stones, and jewelry made from these materials) among VAT-registered businesses in the UAE. Under this mechanism, the supplier of the Goods is not responsible for calculating and reporting the VAT, but rather the recipient business must account for the VAT on the supply. The resolution aims to simplify the VAT compliance process for these types of transactions. (Cabinet Resolution On the Application of Reverse Charge Mechanism to Precious Metals and Precious Stones Among Registrants in the State for Value-Added Tax Purposes, 2024, Art. 1-2)
What are the key definitions under this law?
The Cabinet Resolution provides the following key definitions:
- Goods: Precious metals, precious stones, and jewelry made of any precious metal or precious stone or a combination thereof, provided that the value of the precious metal or precious stone is higher than the value of the other components.
- Precious Metals: Gold, silver, palladium, and platinum.
- Precious Stones: Natural and synthetic diamonds, pearls, rubies, sapphires, and emeralds.
(Cabinet Resolution On the Application of Reverse Charge Mechanism to Precious Metals and Precious Stones Among Registrants in the State for Value-Added Tax Purposes, 2024, Art. 1)
What are the main obligations and requirements?
The main obligations and requirements under this Cabinet Resolution are: 1. If a supplier supplies Goods to a registered recipient who intends to resell them or use them to produce or manufacture Goods, the supplier is not responsible for calculating and reporting the VAT on the supply. Instead, the recipient must calculate and account for the VAT. 2. The recipient must provide the supplier with a written statement confirming their intention to resell or use the Goods, as well as a written statement confirming their VAT registration, before the date of supply. 3. The supplier must receive and keep the written statements from the recipient, and verify the recipient's VAT registration, before the date of supply. (Cabinet Resolution On the Application of Reverse Charge Mechanism to Precious Metals and Precious Stones Among Registrants in the State for Value-Added Tax Purposes, 2024, Art. 2)
What exemptions or exceptions apply?
The reverse charge mechanism does not apply if the supply of Goods is subject to zero-rated VAT in accordance with Article 45(1) of Federal Decree-Law No. 8 of 2017 on VAT. In such cases, the supplier remains responsible for calculating and reporting the VAT. (Cabinet Resolution On the Application of Reverse Charge Mechanism to Precious Metals and Precious Stones Among Registrants in the State for Value-Added Tax Purposes, 2024, Art. 2)
How does this law interact with other UAE legislation?
This Cabinet Resolution references and interacts with the following other UAE legislation: - Federal Decree-Law No. 8 of 2017 on Value-Added Tax - Cabinet Resolution No. 52 of 2017 on the Executive Regulation of Federal Decree-Law No. 8 of 2017 on Value-Added Tax - Cabinet Resolution No. 25 of 2018 on the Mechanism for Applying Value-Added Tax on Gold and Diamonds Among Registrants in the State This Cabinet Resolution repeals Cabinet Resolution No. 25 of 2018, and any other provisions that violate or contradict its own provisions. (Cabinet Resolution On the Application of Reverse Charge Mechanism to Precious Metals and Precious Stones Among Registrants in the State for Value-Added Tax Purposes, 2024, Art. 4)
When did this law come into effect?
The legislation does not specify an effective date. It states that the Cabinet Resolution shall be published in the Official Gazette and shall enter into force sixty (60) days after the date of its publication. (Cabinet Resolution On the Application of Reverse Charge Mechanism to Precious Metals and Precious Stones Among Registrants in the State for Value-Added Tax Purposes, 2024, Art. 5)
Source Documents
This article analyses Cabinet Resolution On the Application of Reverse Charge Mechanism to Precious Metals and Precious Stones Among Registrants in the State for Value-Added Tax Purposes for legal research and educational purposes. For the purpose of interpretation and application, reference must be made to the original Arabic text. In case of conflict, the Arabic text prevails. This does not constitute legal advice.