VAT on Gold UAE: Rate, Exemptions, & New Rule 2025

The United Arab Emirates (UAE), renowned for its thriving gold and diamond industry, has positioned itself as a global hub for precious metals and gemstones. Understanding the Value Added Tax (VAT) implications is vital for traders and investors navigating this lucrative market. Since introducing VAT at a standard rate of 5% in 2018, the UAE has implemented key exemptions for certain gold in the UAE and a rule for B2B transactions. These measures, aimed at minimising cash flow impacts, have enhanced the UAE’s market appeal. This article is intended to provide comprehensive information on VAT on Gold in UAE, exemptions, new VAT rules, and other relevant details.

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What is VAT in UAE?

Value Added Tax (VAT) in the UAE is a consumption tax introduced at a standard rate of 5%, applicable to most goods and services with specific exemptions. Certain goods and services, such as exports to countries outside the VAT-implementing Gulf Cooperation Council (GCC) member states, are zero-rated with a 0% VAT rate. VAT is charged at each stage of the supply chain, with the ultimate cost paid by consumers. Businesses play a crucial role in this system by collecting and accounting for VAT on behalf of the government, ensuring compliance and transparency in tax processes.

What is VAT on Gold in UAE?

VAT on gold in the UAE is governed by specific regulations designed to support the country's position as a global hub for the precious metals market. The standard VAT rate of 5% applies to most gold transactions. However, as mentioned, exemptions exist for investment-grade gold, defined as gold with a purity of 99% or higher. Additionally, a reverse charge mechanism is implemented for B2B transactions, allowing businesses to account for VAT without immediate cash outflows. These measures aim to reduce financial burdens on traders and investors while enhancing the UAE's competitiveness in the global gold market.

VAT Exemptions on Gold in UAE

In this section, we’ll focus on the criteria and benefits of VAT exemptions on Gold in UAE, 

Criteria:

Not all gold transactions qualify for VAT exemption in the UAE. To be eligible, specific conditions must be met:

• High-Purity Metals: The exemption is limited to gold, silver, and platinum with a minimum purity level of 99%, ensuring it applies only to high-purity metals.
• Investment-Grade Gold Products: Investment-grade items, including gold bars, coins, and bullion that meet the required purity standard, are eligible for VAT exemption.
• Business-to-Business (B2B) Transactions: VAT exemption applies exclusively to transactions between VAT-registered businesses within the UAE, emphasising its focus on B2B dealings.

Benefits:

The VAT exemption on gold offers numerous benefits help traders, investors, and consumers:

• Simplified Operations for Gold Traders and Jewellers: The removal of VAT-related costs reduces financial burdens, streamlining business operations for gold traders and jewellers. This encourages a higher volume of transactions within the UAE's gold market.
• Enhanced Appeal for Investors: Gold becomes an even more attractive investment option with tax-free pricing. The clarity and simplicity in pricing further enhance its appeal as a secure and lucrative investment.
• Boost High-Volume Trading: The trading volume of Gold can be increased in the UAE’s market since the VAT cost is reduced, which can attract global investors and businesses.
• Benefits for Consumers: Although immediate price reductions may not be evident, the increased market competitiveness can lead to better pricing options for gold buyers.

Documents and Compliance Requirements for VAT Exemptions on Gold

Businesses seeking VAT exemptions on gold transactions in the UAE must adhere to specific documentation and compliance requirements. These include:

• Tax Invoices: A detailed tax invoice must be issued for every transaction and should include the following:
• Supplier’s name, address, and Tax Registration Number (TRN).
• Buyer’s name and address (for B2B transactions).
• Description of goods or services, such as gold, diamonds, or any applicable making charges.
• Date of supply and invoice issuance.
• Price breakdown, including making charges, the value of goods, and any VAT applied.
• Indication of whether the reverse charge mechanism is applied, as clarified in VATP032 public guidance.
• Certificates of Authenticity: For transactions involving VAT-exempt gold (e.g., 99% purity or higher), certificates of authenticity are required to verify the gold's purity. These documents are essential for claiming VAT refunds or documenting exemptions in tax returns.
• Proof of VAT Registration: Both the buyer and seller must provide their Tax Registration Numbers (TRN) to confirm VAT registration. Verifying the VAT registration of trading partners is crucial, especially for applying the reverse charge mechanism in B2B transactions.
• Sales and Purchase Contracts: High-value transactions must be supported by contracts explicitly detailing:
• The nature of the sale or service.
• The value of gold or diamonds.
• Any applicable making charges.
• VAT treatment for the transaction.
• Import and Export Documentation: For imports, businesses must provide customs documents that specify:
• The import value.
• Applicable customs duties.
• VAT treatment for imported goods.
• For exports, documentation such as shipping invoices must confirm that goods have left the UAE to qualify for VAT exemptions.
• Bank Statements and Payment Proofs: To substantiate the values stated on tax invoices, businesses must maintain copies of bank statements or payment proofs, creating a clear financial trail for auditing and compliance purposes.

New VAT Rules on Gold and Precious Metals in UAE

The UAE Ministry of Finance has introduced Cabinet Decision No. (127) of 2024, which significantly expands the scope of the Reverse Charge Mechanism (RCM) for VAT-registered businesses dealing in precious metals and stones. This new decision replaces Cabinet Decision No. (25) of 2018, which previously limited the RCM to transactions involving gold and diamonds among registered dealers.

Under the revised rules, VAT-registered suppliers in the precious metals and stones sector, which includes gold, are no longer required to charge VAT on business-to-business (B2B) transactions or remit the tax to the Federal Tax Authority. Instead, VAT-registered buyers must account for the VAT on both the purchase and sale of goods in their VAT returns. This streamlined approach applies only when both parties are VAT-registered in the UAE.

These changes are designed to simplify compliance for businesses and enhance cash flow management by eliminating the need for upfront VAT payments on qualifying transactions. This update highlights the UAE's commitment to supporting its thriving precious metals and gemstones sector.

Learn more: New VAT rules for precious metals and gemstone traders

VAT Compliance: How to File VAT returns in UAE?

After charging the VAT on gold as per the prescribed rate, it is necessary to do VAT return filing to comply with UAE’s rules and regulations. Here are the brief steps to file VAT returns:

• Step 1 - Login to the FTA eServices Portal: Begin by logging into the FTA eServices portal and navigating to the ‘VAT’ tab. This will provide access to your VAT Returns. Select the “VAT 201 – New VAT Return” option to start the filing process.
• Step 2 - Complete the VAT Return Form: Fill in the required details on the form, including:
• The net amounts for sales and outputs (excluding VAT).
• The VAT amount charged on sales.
• The expenses and inputs (net amounts excluding VAT) along with the VAT on them.The system will automatically calculate the payable or refundable tax amount based on the information provided.
• Step 3 - Submit the Form: Carefully review the information you enter to ensure all mandatory fields are filled out accurately. Once confirmed, click the "Submit" button to file your VAT return.
• Step 4 - Settle Payable VAT: If there is a VAT payable, make the necessary payment through the “My Payments” tab. Ensure that payment deadlines are adhered to, avoiding any penalties.

Keeping track of deadlines and ensuring accurate submissions will help maintain compliance with UAE VAT regulations. Failing to file returns can result in severe VAT penalties.

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Clarification of VAT application on Gold Jewellery-Making Charges

In 2022, the Federal Tax Authority (FTA) issued VATP029, clarifying VAT treatment on gold jewellery-making charges. This guidance helps businesses understand how VAT applies to gold jewellery services and products. The key points are:

• Single Composite Supply: When the price of gold and making charges are coupled, it is treated as a single composite supply. In this case, VAT is applied to the total supply under the Reverse Charge Mechanism (RCM). This applies when:
• Gold Items are the primary component, and the making services are ancillary or incidental elements.
• The price is a combined amount for gold and making services.
• Gold items and making services are supplied by the same supplier. 
• Multiple Supplies: If making charges are billed separately, VAT at the standard rate of 5% is applied to the making charges, while the gold items fall under the Reverse Charge Mechanism, provided all the requirements outlined in Cabinet Decision No. 25 of 2018 are met.

VAT Refund on Gold for Tourists

Tourists purchasing gold in the UAE are eligible for a VAT refund, but several conditions must be met. To qualify, a tax-free transaction must be issued by the retailer and validated by Planet. As per FTA rules, the VAT refund can only be processed if the goods are validated by the tourist at the designated validation points located at UAE exit points, with the original tax invoice(s) provided. For accurate guidance and assistance, tourists should seek all VAT refund information directly from Planet Tax-Free staff.

Learn more: How to claim VAT refund for tourists?

Conclusion

In conclusion, the UAE's VAT framework on gold transactions is designed to streamline business operations and enhance the country's global appeal as a hub for precious metals. The VAT system supports traders and consumers with specific exemptions for investment-grade gold, the reverse charge mechanism for B2B transactions, and provisions for VAT refunds for tourists. Understanding and complying with VAT regulations is essential for businesses to ensure smooth operations and avoid penalties. These measures, along with recent updates like Cabinet Decision No. (127) of 2024 aims to simplify compliance, reduce cash flow burdens, and foster growth in the UAE's thriving gold market.

FAQs

1. What is the VAT rate on gold transactions in the UAE?

The VAT rate on gold transactions in the UAE is 5%, with specific exemptions for high-purity gold.

2. What is the VAT exemption criteria for gold in the UAE?

Gold transactions qualify for VAT exemption if the gold is investment-grade, with a purity of 99% or higher, and if the transaction is a B2B deal between VAT-registered businesses.

3. What types of gold qualify for VAT exemption in the UAE?

Investment-grade gold products such as gold bars, coins, and bullion that meet the 99% purity standard are exempt from VAT.

4. How does the Reverse Charge Mechanism (RCM) apply to B2B gold transactions in the UAE?

The Reverse Charge Mechanism allows VAT-registered businesses to account for VAT on B2B gold transactions, without the seller charging VAT upfront.

5. How does the new VAT rule under Cabinet Decision No. (127) of 2024 affect gold transactions?

The new rule expands the Reverse Charge Mechanism to include all VAT-registered businesses dealing in precious metals, eliminating the need for sellers to charge VAT in B2B transactions.

6. What documents are required to claim VAT exemptions on gold transactions in the UAE?

To claim VAT exemptions, businesses must provide detailed tax invoices, certificates of authenticity for gold, proof of VAT registration, and contracts detailing the transaction.

7. Are there any benefits for traders and investors with VAT exemptions on gold in the UAE?

The VAT exemption simplifies operations for traders and reduces financial burdens, making gold more attractive as an investment and enhancing the UAE's competitiveness in the global market.

8. How does the VAT exemption affect the pricing of gold in the UAE?

While the VAT exemption reduces tax-related costs for traders, it can lead to more competitive pricing for gold products, benefiting both investors and consumers.

9. Can tourists claim VAT refunds on gold purchases in the UAE?

Yes, tourists can claim VAT refunds on gold purchases, provided Planet validates the transaction at UAE exit points with the original tax invoices.

10. How is VAT applied to gold jewellery-making charges in the UAE?

If gold and making charges are billed together as a composite supply, VAT applies to the total amount under the Reverse Charge Mechanism. If charged separately, VAT is applied at the standard 5% rate on making charges.