Telephone Numbers
Telephone Numbers
For detailed information +90 542 381 3868'Call.
Dubai sits at the crossing point of Asian, European and African trade lanes, and the container throughput of Jebel Ali Port turns that position into a working advantage for the scrap metal trade. Collecting, sorting and re-exporting ferrous and non-ferrous metals gives a well-structured company a repeatable revenue model rather than a one-off arbitrage.
The sector has also become far more tightly regulated: Dubai's 2024 waste management law and the reverse charge mechanism applied to scrap metal supplies from 2026 changed how licences and invoices must be handled. Choosing the correct licence category, sequencing environmental approvals early and knowing who accounts for VAT will shape both the setup budget and the operational risk.
Scrap metal trading in the UAE rests on two pillars: the volume generated by construction and infrastructure activity, and an export-oriented redistribution network. Material collected locally is sorted and baled in Dubai, then shipped to smelters across the Indian subcontinent, the Far East and the Eastern Mediterranean. The UAE Circular Economy Policy 2021-2031 and the Net Zero 2050 commitment are the two policy frameworks that keep structural demand for recovered raw material rising.
Remelting scrap uses far less energy and water than producing metal from ore, and cuts both greenhouse gas emissions and mining waste. On the commercial side, recovered metal acts as a buffer against raw material price swings for manufacturers. That dual benefit turns scrap trading into a permanent link in the industrial supply chain rather than a pure brokerage business.
The licence category follows what the business physically does. If the operation is limited to buying, selling and shipping, a scrap metal trading licence is sufficient. Cutting, baling, smelting or sorting requires a recycling or industrial licence. On the mainland the issuing authority is the Department of Economy and Tourism (DET); inside a free zone it is the relevant zone authority. Waste collection, transport and treatment additionally fall under Dubai Municipality, while cross-border movements of hazardous waste involve the Ministry of Climate Change and Environment (MOCCAE).
Wholesale trade in metal scrap sits within the wholesale group of the UAE activity classification (metal waste and scrap wholesale under ISIC 4669). Selecting the correct activity code at application stage matters well beyond the licence itself: it determines customs declarations, bank account onboarding and VAT treatment later on. An inaccurate code creates mismatches in export documentation and triggers additional approval requests.
This is a customer-profile decision, not only a cost decision. A supplier selling directly into the UAE domestic market is usually better served by a mainland licence, while an import, processing and re-export operation tends to be more efficient in a free zone. A detailed comparison is available in our guide on mainland versus free zone company formation in Dubai.
| Criterion | Free Zone | Mainland |
|---|---|---|
| Foreign ownership | 100% | 100% for most activities |
| Sales into the UAE market | Through a distributor or customs declaration | Direct |
| Corporate tax | 0% on qualifying income if QFZP conditions are met | 9% on profit above AED 375,000 |
| Processing facility | Possible in zones offering industrial plots | Possible with municipal and environmental approvals |
| Typical use case | Import, sorting and re-export | Local collection and domestic supply |
The setup budget moves with the choice of jurisdiction, licence type, visa quota and storage requirement. The ranges below are indicative figures commonly seen in the market; binding amounts should be taken from the current tariff of the relevant free zone authority or DET. Yard and warehouse costs should be assessed separately, and our overview of warehouse rental in Dubai is a useful starting point.
| Cost Item | Indicative Range (AED) | Notes |
|---|---|---|
| Free zone trading licence | 12,500 - 30,000 | Varies with visa quota and office package |
| Mainland licence | 15,000 - 50,000 | Depends on DET approvals and activity type |
| Industrial / recycling licence | Project specific | Requires facility, equipment and environmental approval |
| Warehouse or open yard rent | Location dependent | Collection, sorting and baling area |
| Visa and residency processing | Per headcount | Investor and staff visas |
| Municipal and environmental permits | Activity specific | Waste transport, treatment and storage approvals |
The scrap groups the company intends to handle must be defined at application stage, because categories classified as hazardous waste require additional approval.
| Scrap Category | Examples | Primary Buyer Industry |
|---|---|---|
| Ferrous metals | Scrap iron, steel, cast iron | Construction, heavy industry |
| Non-ferrous metals | Aluminium, copper, brass, lead | Electrical, automotive, aerospace |
| Electronic waste (e-waste) | Boards, cabling, handsets, servers | Precious metal recovery |
| Catalytic converters | Parts containing platinum, palladium, rhodium | Refineries and smelters |
| Industrial equipment | Machinery, pipe, tanks, ship dismantling | Steel production, used parts |
Note: Categories containing hazardous waste, such as batteries, oil-contaminated metal and certain e-waste items, are subject to the Basel Convention notification regime when moved across borders. If these lines are part of the business plan, environmental approval should be mapped out before the licence application.
UAE corporate tax applies to financial years beginning on or after 1 June 2023: 0% on taxable income up to AED 375,000 and 9% above that threshold. Free zone companies can access the 0% rate on qualifying income as long as they satisfy the Qualifying Free Zone Person (QFZP) conditions. QFZP status is not automatic; it requires adequate substance in the free zone, audited financial statements, transfer pricing compliance and non-qualifying revenue that stays within the de minimis limit. Our detailed guide on QFZP status and the 0% corporate tax rate covers the conditions in full.
One point matters specifically for scrap traders: distribution of goods from a free zone counts as qualifying income only where the goods are distributed in or from a Designated Zone and the buyer resells or processes them. Sales to an end consumer fall outside that scope. Separately, UAE subsidiaries of multinational groups with consolidated annual revenue above EUR 750 million fall within the 15% Domestic Minimum Top-up Tax for financial years starting on or after 1 January 2025.
The standard VAT rate in the UAE is 5%. Registration is mandatory for businesses whose annual taxable supplies and imports exceed AED 375,000, and voluntary above AED 187,500.
A 2025 Cabinet Decision introduced a change that goes to the core of this sector: supplies of scrap metal between VAT-registered persons in the UAE are subject to the reverse charge mechanism. The supplier does not charge VAT on the invoice; the obligation to account for and pay the tax shifts to the recipient. For the mechanism to apply, the recipient must be VAT registered, must confirm in a written declaration that the material is for resale or processing, and the supplier must retain that declaration and state on the invoice that the reverse charge applies.
Operational impact: The reverse charge eases working capital in scrap trading, but where no written declaration is obtained the VAT exposure can remain with the supplier. Accounting workflows and invoice templates need to be aligned accordingly, which is where our Dubai tax consultancy services come in.
Waste management activities in Dubai are governed by Law No. 18 of 2024. It requires a Dubai Municipality permit for the collection, transport, treatment, recovery and disposal of waste, obliges waste producers to keep records, and provides for administrative sanctions in case of breach. Authorisation of transport vehicles and labelling of hazardous waste sit within the same framework. Our municipal and ministry permit services shorten this stage considerably.
| Obligation | Rate / Threshold | Note |
|---|---|---|
| Corporate tax | 0% up to AED 375,000, 9% above | Financial years from 1 June 2023 |
| QFZP qualifying income | 0% | Subject to substance, audit and de minimis conditions |
| Standard VAT rate | 5% | Reverse charge between registrants on scrap metal |
| VAT registration threshold | Mandatory AED 375,000 / voluntary AED 187,500 | Annual taxable supplies and imports |
| Domestic Minimum Top-up Tax | 15% | Groups with consolidated revenue above EUR 750 million |
With complete documentation the process typically closes within 5 to 10 working days; projects involving an industrial facility and environmental approval take longer.
In scrap trading the margin usually hides in shipment planning. Container fill rate, port handling charges and certificates of origin all feed directly into profit per tonne. When designing the export side it is worth reading our guides on import and export company structures in Dubai and logistics company formation together.
Not every free zone permits scrap and waste activities; the ones that do generally offer industrial plots, open yard space and heavy vehicle access. Port-linked zones suit an import and re-export model, while industrially oriented zones are a better fit for processing and baling. Before applying, confirm the visa quota, the minimum warehouse area and whether scrap actually appears on the zone's approved activity list. Our overview of Dubai free zones compares the main options.
Disclaimer: The rates, thresholds and cost figures on this page are indicative and subject to legislative change. Binding amounts and rates should be taken from the current publications of the Federal Tax Authority, the Department of Economy and Tourism and the relevant free zone authority.
Profitability in scrap trading is determined less by the spread between purchase and sale price than by sorting quality, container fill rate and shipment timing. Separating mixed scrap correctly into ferrous and non-ferrous streams lifts the revenue achieved from the same tonnage significantly. Because unit values are high in non-ferrous lines such as copper, aluminium and brass, even a modest facility can reach a competitive margin when the operation is designed properly.
What sets Dubai apart for this model is that supply and demand meet in the same city. Construction and infrastructure projects feed local supply, while smelters across the Indian subcontinent, the Far East and the Eastern Mediterranean provide continuous demand. Reduced customs burden on re-exports from a free zone is the mechanism that connects those two ends.
Target monthly throughput, open yard and warehouse area, baling equipment investment, working capital requirement and the geographic spread of the buyer portfolio are the decisive items in the feasibility study. Licence type and jurisdiction should be selected only once those five points are clear.
Identifying the correct licence category, sequencing environmental approvals and completing VAT and corporate tax registrations on time are the three stages that consume the most time in a scrap metal setup. Getting the structure right from the outset removes the cost of later licence amendments and additional approvals.
For company structure, jurisdiction selection and permit processes you can reach us through our contact page or request a quotation and consultation prepared for your setup budget.
A scrap metal trading licence is sufficient if the business only buys, sells and ships. Cutting, baling, sorting or smelting requires a recycling or industrial licence together with approvals from Dubai Municipality and the environmental authorities. The licence is issued by the Department of Economy and Tourism on the mainland and by the relevant zone authority inside a free zone.
Cost depends on jurisdiction, licence type, visa quota and facility requirement. Free zone trading licences commonly fall in the AED 12,500 to 30,000 range and mainland licences in the AED 15,000 to 50,000 range as indicative figures. If a processing facility is planned, equipment, open yard rent and environmental approval must be budgeted separately.
Being established in a free zone does not by itself grant an exemption. Companies meeting the Qualifying Free Zone Person conditions benefit from a 0% rate on qualifying income; those conditions include adequate substance, audited financial statements and compliance with the de minimis limit. The general rate is 0% up to AED 375,000 and 9% above it.
The standard VAT rate is 5%. For scrap metal supplies between two VAT-registered parties the reverse charge mechanism applies: the supplier does not charge VAT on the invoice and the obligation to declare and pay shifts to the buyer. The buyer must be VAT registered and must provide a written declaration that the material is for resale or processing.
Yes. Full foreign ownership is standard in the free zones. On the mainland, complete ownership is also available for many activities including scrap trading, although exceptions can apply depending on the activity list, so the specific activity code should be confirmed before the licence application.
For a trading licence with complete documentation the process is generally finished within 5 to 10 working days. Where a processing facility, open yard or hazardous waste category is involved, municipal and environmental approvals extend the timeline to several weeks.
In Dubai, collection, transport, treatment and disposal of waste require a Dubai Municipality permit under Law No. 18 of 2024. Authorisation of transport vehicles, labelling of hazardous waste and record keeping are mandatory. Cross-border movements of hazardous waste additionally follow the Basel Convention notification procedure.
The answer depends on the business model. Port-linked zones suit import and re-export operations, while zones offering industrial plots and open yard space suit baling and sorting. Before applying, confirm that scrap appears on the approved activity list of the zone and check the minimum warehouse area requirement.
+90 542 381 3868
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