Recently, the UAE has implemented some changes regarding VAT on Gold in UAE, which is expected to enhance its status as a major trading center of precious metals in the world. These changes are important to businesses dealing in gold, platinum, silver, or jewellery, particularly those dealing in it wholesale or in investment-grade products.
Gold has been a special part of the UAE economy, whether it is glittering jewellery shops in Dubai Gold Souk or massive bullion trading centres. Since the implementation of Value Added Tax (VAT) in 2018, individual buyers and jewellery businesses have been forced to learn how VAT on Gold in UAE and the Emirates in general functions.
- The UAE has a standard VAT rate of 5 % on goods and services, including gold.
- It has also introduced a new VAT exemption for some high-purity gold, silver, and platinum transactions between VAT-registered businesses.
Exception: This exemption is not applicable to retail sales (end consumers), or to products that are of a purity less than specified, unless standards are satisfied.
What is the significance of the Exemption on VAT on Gold in UAE?
The new regime is associated with a number of advantages:
- Reduced transaction costs – It has reduced the 5% VAT charged between registered parties in trading investment-grade precious metals.
- Greater market attractiveness – The exemption will make the UAE more attractive to international traders and investors.
- Stimulate the economy – This policy will assist in attracting foreign investment and also assist in the strategic vision of the UAE to become a global gold trade centre.
Who is Exempt from Paying VAT on Gold in UAE Transactions?
To be exempt from the VAT on gold in UAE transactions:
- The metals (gold, silver, platinum) should be of a minimum purity (usually 99% and more).
- The items should be investment grade, i.e., bullion, bars, coins, meeting purity standards.
- The buyer and seller should be registered businesses in the UAE, and the transaction should be in a B2B environment.
What You Need to Do: Compliance & Documentation
To be able to claim the exemption without any problems:
- Retain a good record of transactions, such as VAT invoices and evidence of the VAT registration of both parties.
- Keep records of the purity of metals and that the material is investment-grade.
Adhere to the UAE taxation rules; otherwise, the VAT exemption will be invalid, and the VAT penalties will be imposed.
Making Charges & Jewellery: What is Different?
The Federal Tax Authority (FTA) of the UAE published Public Clarification VATP029 on the application of VAT in cases where charges are charged in relation to gold jewellery:
Single Composite Supply: In the case of gold and the jewellery-making service being sold as a single price, with gold being the major component, a reverse charge mechanism can be used.
Multiple Supplies: In case the making charges are charged individually, making charges are subject to VAT (5%); the gold element can be subject to the reverse charge regime, subject to other conditions
Conclusion
The VAT on Gold in UAE is aimed at balancing both the revenue collection and the image of the country as a trading center in the world. As a jewellery purchaser in Dubai, a wholesaler, or a bullion investor, it is necessary to know about the VAT on Gold in UAE, whether it is exempted or zero-rated, and the reverse charge mechanism to save money and comply.
My Taxman is ready to assist individuals and businesses with all the details of gold taxation. Our experts will make sure you are up to date with VAT registration and filing, and are maximising the amount of refunds you are entitled to.
Contact My Taxman at +971-543223140 now to get personal advice on gold VAT, Corporate tax, and all your tax requirements in the UAE
