From January 14, 2026, VAT handling in the scrap metal sector will change with the introduction of a reverse charge mechanism. The Ministry of Finance announced Cabinet Decision No. 153 of 2025, shifting the responsibility for declaring and paying VAT from sellers to buyers in transactions between VAT-registered businesses.
Currently, suppliers charge VAT and remit it to the Federal Tax Authority (FTA). Under the new system, suppliers will no longer add VAT to invoices. Instead, buyers will account for the VAT directly in their VAT returns.
The rule applies to scrap metal bought for resale or for processing into manufacturing materials and only covers transactions where both parties are VAT-registered. Businesses in the sector must adjust their accounting and compliance processes. The ministry says the move aims to curb tax evasion, reduce fraud, improve refunds, and boost transparency and fair taxation.
