Reverse charge on gold and diamonds

In short

When you sell gold, diamonds or other covered precious metals and stones to a VAT-registered buyer who will resell them or use them to make other goods, you do not charge VAT. The buyer accounts for the VAT in its own return. This is the domestic reverse charge. Your eInvoice must show it as reverse charge on every covered line.

Why eInvoicing needs it

Cabinet Decision No. 127 of 2024 sets the rule. It took effect on 25 February 2025 and replaced Cabinet Decision No. 25 of 2018, which covered only gold and diamonds. The current decision covers:

• gold, silver, palladium and platinum
• natural and synthetic diamonds, pearls, rubies, sapphires and emeralds
• jewellery made from these, where the precious parts are worth more than the other materials

The reverse charge applies only when all of these are true:

• Both seller and buyer are registered for VAT in the UAE.
• The buyer gives you two written declarations: one that it is registered with the Federal Tax Authority (FTA), and one that it buys the goods to resell them or to manufacture.
• You check the buyer's registration and keep both declarations on file.

If the buyer does not give the declarations, the reverse charge does not apply and you are responsible for the VAT.

The eInvoicing guidelines say a reverse-charge invoice must not include VAT, must state the reason the supply is under the reverse charge, and must name the type of goods. Every line carries a VAT category, and reverse charge is its own category.

A common mistake is to label these sales "exempt" or "zero rated" because the invoice shows no VAT. Both are wrong. An exempt supply has no VAT at all. A zero-rated supply has VAT at 0%. A reverse-charge supply carries VAT at 5%, paid by the buyer.

What good looks like

An invented sale from Gulf Gem Trading FZE (seller Tax Registration Number 101010100200003) to a registered jewellery maker (buyer Tax Registration Number 100041283700003):

Field	Value
Document	Tax invoice
Buyer Tax Registration Number (TRN)	100041283700003
Item	Cut and polished natural diamonds
Customs tariff (Harmonised System, HS) code	710239
Type of goods	Gold and diamonds (reverse charge)
VAT category	Reverse charge
VAT rate and amount	0, VAT amount 0.00
Statement	"Reverse charge: the recipient is required to account for VAT under Article 48 of Federal Decree-Law No. 8 of 2017 and Cabinet Decision No. 127 of 2024."

Common HS headings for these goods:

Goods	HS heading
Diamonds	7102 (rough, not industrial: 710231; cut and polished: 710239)
Gold, unwrought or semi-manufactured	7108
Silver	7106
Platinum and palladium	7110
Pearls	7101
Rubies, sapphires and emeralds	7103
Jewellery of precious metal	7113

Confirm the exact code for each item with your customs broker.

When the same seller sells a ring to a consumer, or sells to a trader who is not registered for VAT, the line is standard rated at 5%. That invoice must not carry the reverse-charge statement. Print the statement only on reverse-charge sales.

How to fix it in Tally

1. Go to Gateway of Tally, press Alt+G (Go To), and choose Alter Stock Item. Add the HS code to each diamond, gold and jewellery item.
2. Keep a separate sales ledger and voucher type for reverse-charge sales, so these lines never pick up 5% VAT.
3. Make sure the buyer's TRN is in the buyer's ledger for every registered trader.
4. Remove the reverse-charge statement from the print format used for 5% sales. Keep it only on the reverse-charge voucher type.
5. If your Tally setup cannot mark a line as reverse charge, ask your Tally partner. Your eInvoicing service provider needs to receive that category, not just a zero VAT amount.

How to fix it in Excel or another system

Add these columns to each line:

• VAT category: Reverse charge
• VAT rate: 0
• HS code: for example 710239 (digits only, no dots)
• Type of goods: Gold and diamonds

Add a header field Buyer declarations held with Yes or No. If No, the line becomes standard rated at 5%. If you use an ERP, ask your ERP partner to add a field on each customer that records the declarations and switches the VAT category automatically.

Checklist

• Every covered sale to a registered trader is marked reverse charge, not exempt or zero rated.
• We hold both written declarations from each buyer, and we have checked each buyer's TRN.
• Every covered line carries its HS code.
• Sales to consumers and non-registered buyers charge 5%.
• The reverse-charge statement prints only on reverse-charge invoices.

The law

• Cabinet Decision No. 127 of 2024 on the Reverse Charge Mechanism for Precious Metals and Stones (in force 25 February 2025; repeals Cabinet Decision No. 25 of 2018): https://mof.gov.ae/?p=34611
• Federal Decree-Law No. 8 of 2017 on Value Added Tax, as amended, Article 48(8) (the Cabinet may specify other goods subject to the reverse charge): https://mof.gov.ae/wp-content/uploads/2025/07/Federal-Decree-Law-No.-8-of-2017-and-amendments.pdf
• Executive Regulation of the VAT Law, Article 59(1)(l) (a tax invoice where the recipient accounts for tax states this and refers to the relevant provision).
• MoF UAE Electronic Invoicing Guidelines V1.1, Sections 10.5 and 10.5.1 (reverse charge category, narrative and type of goods): https://mof.gov.ae/wp-content/uploads/2026/06/UAE-Electronic-Invoicing-Guidelines_V-1.1-01June2026.pdf
• Peppol PINT AE code list AE-GoodsType (type of goods or services subject to reverse charge): https://docs.peppol.eu/poac/ae/v1.0.3/pint-ae/trn-invoice/codelist/GoodsType/