UAE Gold VAT is standard at 5% under the reverse charge mechanism; however, certain types of gold, such as investment-grade gold with a purity of 99% or higher, may be exempt under specific conditions. The rule was presented in Cabinet Decision No. 127 of 2024, covering precious metals such as gold, silver, diamonds, gemstones, platinum, and rubies, as well as jewellery with precious components. These VAT updates simplify compliance, boost business growth, and meet international standards, strengthening the UAE’s position as a global hub for gold and other precious metals.
Due to the reduced costs, gold trading and investing have become more attractive, and a proper understanding of the rules can help you earn decent profits from gold investment. This guide provides comprehensive information on gold VAT in the UAE, including recent updates, compliance requirements, eligibility criteria, and strategies to maximize the benefits of gold trading.
What is the Reverse Charge Mechanism? – UAE Gold VAT
The VAT process shifts the responsibility for calculating and paying VAT to the buyer of goods and services. The supplier is not responsible for charging VAT on the invoice. Instead, the recipient calculates the VAT on the purchased goods and services and declares it in their VAT return. The reverse charge mechanism applies to certain goods, including precious metals and other gemstones, under the new VAT rule. Compliance becomes simpler for suppliers of goods, ensuring that VAT is paid directly by the buyer or user.
Simplified Process for Suppliers
It reduces the workload of the sellers as they are no longer required to charge and collect Value Added Tax (VAT).
Maintains the Cash Flow of Buyers
It eases the financial burden on buyers, as they don’t have to pay VAT but must declare it in their VAT return.
Compliance with Tax Liability
Streamlined procedures encourage compliance with tax regulations, especially in the precious metals industry.
What are the 2025 Updates on UAE Gold VAT?
The authorities in the UAE have applied a standard 5% value-added tax (VAT) on goods and services. For those wondering if there is VAT on gold in the UAE, the standard 5% VAT rate remains unchanged. However, the new VAT exemption for precious metals, such as gold, silver, and platinum, when traded between businesses, is expected to encourage the gold trade in the country. It is important to note that these exemptions are only applied to business-to-business trade, not to customer purchases.
What is the Impact of Reverse Charge Mechanism on Traders?
The reverse charge mechanism shifts VAT responsibility from the supplier to the recipient, simplifying compliance for traders.
Seller’s Duty: The seller doesn’t charge VAT on the invoice.
Buyer’s Duty: The buyer calculates and declares VAT in the VAT return.
Relevant Transactions: The transactions occur between VAT-registered companies and involve goods where the price of precious metals exceeds the value of other components in jewellery.
For example, a diamond retailer buys uncut diamonds for AED 500,000 from a registered seller. Suppliers have not charged any VAT. The retailer calculates the 5% VAT (AED 25,000) and declares it in their return.
What is the Impact of Reverse Charge Mechanism on Customers? – UAE Gold VAT
Sellers include a 5% Value Added Tax (VAT) at the point of sale for non-registered (individual) buyers/customers.
VAT on Purchases
Buyers pay 5% VAT on gold, diamond and other jewellery purchases.
Clear Tax Reporting
The invoices must show the VAT amount.
For example, if a customer buys a gold ring for AED 50,000. The VAT charge is 2500, which brings the total price to AED 52,500.
Practical Examples – UAE Gold VAT
Transaction
A jewellery maker buys platinum worth AED 1 million from a metal supplier (VAT-registered).
VAT Treatment
The supplier provides an invoice without VAT, and the jewellery manufacturer will calculate AED 50,000 – 5% and report it in their VAT return.
What are the Benefits of New VAT Rules? – UAE Gold VAT
The new VAT rules have broad benefits for business in the UAE,
For Suppliers
The authorities have exempted Suppliers from collecting, Calculating and remitting VAT, which has significantly reduced their workload.
For Recipients
The new rule requires buyers to handle VAT declarations, making the process easy for both parties.
- Buyers do not pay VAT upfront during their transactions.
- VAT exemptions for registered businesses are a good choice for making the trade of gold, platinum, and other precious metals.
- These streamlined VAT regulations align with international standards, making the UAE a global and prominent hub for the trade of gold, diamonds, and other precious metals.
- The clear VAT rules help minimize calculation errors and ensure compliance with regulations.
- Accurate reporting builds trust between the government and businesses, harbouring a beneficial environment for trade.
Scope of New VAT Rule – UAE Gold VAT
The authorities have included the following metals in the new rule:
- Silver
- Gold
- Platinum
- Palladium
The authorities include these metals whether the traders sell them as raw materials or finished goods.
The scope also extends to,
- Natural and manufactured diamonds
- Sapphires
- Pearls
- Rubies
- Emeralds
UAE VAT on gold ensures clarity in taxation for both raw and processed stones.
Jewellery made with stones and precious metals is included in the law if,
The value of the precious components exceeds that of other elements, such as non-precious metals, designs, or settings.
This criteria ensures the law applies to the expensive items in the trading industry.
Key Benefits of New Expanded Scope – UAE Gold VAT
The main benefits of the expanded scope are,
- Broader Coverage. It includes a wider range of items for better rule compliance.
- Clear Understanding for Businesses. It reduces confusion by clarifying which item qualifies for VAT.
- International Alignment. It aligns with global trade standards, increasing the UAE’s reputation.
Impact of Expanded Scope on the Precious Metals Sector
The key impact of new VAT rules in UAE on precious metals and stones are as follows,
Increased Competitiveness in the International Market
- The new simplified VAT rules have made businesses’ administrative work more simple.
- The increase in cash flow for buyers has made the trading attractive for international partners.
- It increases the operational efficiency of UAE traders, reduces their financial burden, and makes it easier to compete with international competitors.
Following the International Best Standards
The VAT rules in UAE align with the global best standards, supporting trust and credibility among international traders and investors.
Making UAE a Global Hub For Trade of Precious Metals
New VAT rules are business-friendly and clearer, which has made the UAE a premier hub for the trade of gold, silver, diamonds, and other jewellery.
These updates also attract international companies to invest in the UAE, further strengthening its position as a global trading hub.
What are the Compliance Requirements for Registered Traders?
A registered trader must comply with the following,
- Stay registered for VAT with the Federal Tax Authority (FTA) to ensure compliance.
- Participate in the trading of precious metals, including gold, platinum, silver and palladium, as well as precious stones like diamonds, sapphires, rubies, pearls, and emeralds, or jewellery where the value of precious elements exceeds that of other materials.
Requirements for Buyers
Under the reverse charge mechanism, buyers must fulfil the following,
Evaluate the Invoice. Ensure the supplier has not charged VAT and that both parties’ Tax Registration Numbers (TRNs) are listed.
Calculate the VAT. The buyer needs to determine 5% of the transaction value. For example, if the transaction is AED 1,000,000, the VAT will be AED 50,000.
Report the VAT. Declare the calculated VAT in the relevant section of the VAT return.
Submit the VAT. File the VAT return before the FTA’s declared deadline.
Legal Compliance. The buyer must adhere to all applicable legal requirements. Otherwise, they may face fines, penalties and cancellation of trade licenses.
Accurate Reporting. Ensure the reporting is accurate to remain in good standing with the Federal Tax Authority.
Maintaining Reputation. Compliance shows professionalism and builds trust among partners.
Summary
Ultimately, the new UAE gold VAT rule has shifted VAT calculation and declaration responsibility from traders to buyers. The process can be complex, but the benefits are enormous. The update simplifies compliance requirements, boosts business growth and aligns with international standards, positioning UAE as a prime hub for the trade of precious metals and gemstones.
Contact Al Riyady for more details on VAT regulations or explore how to make your business successful. Contact our expert team for specialized services, including Auditing Services, Accounting Services, Business Valuation, and more.
