VAT on Gold Trade in UAE

A standard 5% VAT applies to most gold items. An important distinction exists between jewelry and investment gold. Gold jewelry always has a 5% VAT on the total price. High-purity investment gold often has special tax treatment. Therefore, knowing the difference helps you manage costs.

Ask a VAT Tax Expert

VAT on Gold Jewellery: What You Pay

You must pay 5% VAT on gold jewelry purchases. The tax applies to the item's full value. Remember, this includes both the gold price and the making charges. Retailers are required to show the VAT amount clearly on your invoice. Here is a simple breakdown of a jewelry purchase.

Always ask for a detailed tax invoice. It is proof of the VAT you paid. You will need it for any potential tourist refunds.

Investment Gold: The Zero-Rate and Reverse Charge Rules

The UAE government created special rules for investment gold. These rules support the wholesale gold market. They make the UAE a competitive place for gold trading.

What is Investment-Grade Gold?

Investment-grade gold meets specific criteria. It must be gold with 99% purity or higher. This rule is set by UAE Cabinet Decision No. 25 of 2018. Common forms include:

• Gold bars
• Ingots
• Coins of high purity

Items like 22-karat (91.6% purity) jewelry do not qualify.

Zero-Rated Supply and Reverse Charge Mechanism

The tax treatment for investment gold has two parts.

• Zero-Rated Supply: The first supply of investment gold is zero-rated. This happens when a refiner sells it to a wholesaler. No VAT is charged on this initial sale.
• Reverse Charge Mechanism (RCM): RCM applies to later business-to-business (B2B) sales. The seller does not charge VAT. Instead, the VAT-registered buyer accounts for it in their tax return. This prevents cash flow issues for gold traders. To use RCM, the buyer must give the seller a written declaration. The declaration confirms the gold will be used for resale.

VAT for Tourists Buying Gold

Tourists can claim a VAT refund on gold purchases. The refund is part of the UAE's Tourist Refund Scheme. You must follow a few simple steps to get your money back.

• Shop at a store participating in the Tax Free Shopping scheme.
• Show your passport at the time of purchase.
• The store will attach a tax-free tag to your receipt.
• You must validate this tag at the airport before you depart.
• Visit a Planet Payment counter to claim your refund.

Note that an administration fee is deducted from the refund amount.

Common Mistakes to Avoid

People and businesses often make preventable errors. Awareness helps you avoid these costly mistakes.

• Incorrectly Identifying Investment Gold: Believing 22k or 21k gold is investment-grade. Only 99% pure gold qualifies for special tax rules.
• Forgetting B2B Declarations: A business buyer must provide a written statement to the seller. Without it, the Reverse Charge Mechanism cannot be used.
• Tourists Skipping Airport Validation: You must get your tax-free tag validated before you check in your luggage. No validation means no refund.
• Not Checking Invoices: Ensure the seller’s Tax Registration Number (TRN) is on the invoice. Also check that the VAT calculation is correct.

Final Words About VAT on Gold in the UAE

The UAE's VAT rules are designed with clear intent. They tax consumer spending on jewelry. They also protect the wholesale investment market. For a jewelry shopper, the most important detail is the final price. Always compare making charges between stores. For investors, the system ensures Dubai remains a global gold hub. Always keep your invoices. They are your official record for tax purposes and proof of ownership.

FAQs About VAT on Gold in UAE

Is there VAT on 22k gold in UAE?

Yes, all gold jewelry has a 5% VAT. This includes 18k, 21k, and 22k gold items. Individuals and authorities calculate the tax on the total price, which includes making charges.

Can I get a VAT refund on gold jewelry in Dubai?

Yes, tourists can get a VAT refund on gold jewelry. You must shop at a registered tax-free store. You also need to validate your purchase at the airport before leaving the UAE.

How does the reverse charge on gold work?

The reverse charge applies to B2B sales of investment gold. The registered buyer accounts for the 5% VAT, not the seller. This mechanism helps traders manage their cash flow effectively.

Is buying gold in Dubai still cheaper with VAT?

Often, yes. Dubai has very competitive making charges. The overall price can be lower than in other countries. This is true even after adding the 5% VAT.

Do I pay VAT when selling my old gold?

Individuals selling personal gold do not charge VAT. However, if you sell to a registered business, they may need to account for VAT on their purchase under specific rules.

References

Federal Tax Authority. (2018). Cabinet Decision No. (25) of 2018 on the Mechanism of Applying Value Added Tax on Gold and Diamonds between Registrants in the State.