The recent amendments in VAT policies have brought a significant shift in the UAE’s gold and precious metals market. To maintain its status as a gold trading hub, the UAE has implemented VAT exemptions for businesses involved in gold trading activity. This exemption of VAT on gold in Dubai is to enhance the financial appeal of the trade and align with the long-term economic vision of the government. Thus, with the reduced costs, not only has investing in gold become appealing, but the country has positioned itself as a top destination for gold trade.  

This guide explores all the details regarding VAT on gold in Dubai, the eligibility criteria, compliance requirements, and some essential tips to navigate gold tax in Dubai.   

Understanding VAT on gold in Dubai: The recent updates 

The UAE introduced VAT in 2018 at a standard rate of 5% on most supplies. Under the Cabinet Decision No. (127) of 2024, the Ministry of Finance in the UAE expands the scope of the Reverse Charge Mechanism (RCM) for businesses dealing in gold and precious metals. The new decision replaces the previous one that limited the RCM to transactions involving gold and diamonds among registered suppliers. 

However, by exempting VAT on gold, platinum, and silver transactions between registered businesses, the country aims to reduce financial burdens on traders and investors while boosting gold trading and enhancing its competitiveness in the global gold market. Nonetheless, it is important to note that the exemption applies to transactions among registered businesses, not consumer purchases. Hence, those involved in gold trading in the UAE can leverage this unique opportunity and maximise their profits while reducing operational costs.  

These revised rules are designed to simplify compliance for businesses and enhance cash flow management within the organization.   

Key benefits of exempting VAT on gold in Dubai 

The exemption of gold tax in Dubai has far-reaching benefits for businesses as well as the economy:  

• Enhances Market Appeal: Removing gold tax in Dubai makes gold and other high-purity precious metal trading more attractive and desirable.  
• Encourages High-Volume Trades: Reduced transaction costs lead to increased trading volume, inviting more global businesses and investors.  
• Supports Economic Growth: By exempting VAT on gold in Dubai, the UAE directly contributes to its economic progress, thereby growing as a leader in the global gold market. 
• Benefits for Consumers: The increased competitiveness in the gold market can provide better pricing options for consumers. 

Eligibility Criteria for VAT Exemptions on Gold in the UAE 

It is to be noted that all gold transactions do not qualify for VAT exemption. Specific conditions need to be met in order to be eligible:- 

• High-Purity Metals: The exemption applies only to high-purity metals with a minimum purity level of 99%, whether it is gold, silver, or platinum. 
• Investment-Grade Gold Products: Investment-grade items that meet the required purity standard, such as gold bars, coins, and precious metal. 
• Business-to-Business (B2B) Transactions: Focuses on dealings between VAT-registered businesses within the UAE. 

Compliance Requirements for VAT Exemption on Gold in Dubai 

Businesses seeking exemption for VAT on gold transactions must fulfill specific documentation and compliance requirements:- 

1. Tax Invoices: 

A detailed tax invoice with the following details: 

• The name, address, and Tax Registration Number (TRN) of the supplier. 
• The name and address of the buyer (for B2B transactions). 
• Description of goods or services. 
• Date of supply 
• Date when the invoice was issued. 
• Price breakdown - Making charges, the value of goods, and VAT applied. 
• Proof of whether the reverse charge mechanism is applied. 

2. Certificates of Authenticity: 

• For transactions involving VAT-exempt gold to verify its purity. 
• Required to claim VAT refunds or document exemptions in tax returns. 

3. Proof of VAT Registration: 

• Tax Registration Numbers (TRN) of both the buyer and seller to confirm their registration for VAT. 
• Crucial for applying the reverse charge mechanism in B2B transactions. 

4. Sales and Purchase Contracts: 

Provide contracts for high-value transactions detailing: 

• The nature of the supply. 
• The value of gold or diamonds. 
• Making charges. 
• VAT treatment for the transaction. 

5. Import and Export Documentation: 

Appropriate customs documents must be provided for imports, specifying: 

• The value of imports. 
• Applicable customs charges. 
• VAT treatment for imported goods. 
• Shipping invoices for exports, confirming that goods have left the UAE. 

6. Bank Statements and Payment Proof: 

• Copies of bank statements or payment proofs to verify the values mentioned on tax invoices. 

7. Comprehensive Transaction Records: 

• VAT invoices 
• Supporting documents 
• Proof of eligibility for VAT exemption 

8. Proof of VAT Registration: 

• Documents confirming the eligibility of both VAT-registered buyer and seller. 

9. Adherence to UAE Tax Laws: 

• Strict compliance with the tax laws and regulations of the UAE to avoid penalties.  

Essential tips to navigate VAT on gold in Dubai 

Businesses dealing in gold or investing in the gold market need to understand and stay compliant with the VAT policies. These are some best practices to keep up with the evolving gold VAT landscape:  

• Stay Updated on Tax Regulations: VAT regulations on gold are more likely to change over time in the UAE. Therefore, businesses must ensure to maintain compliance by regularly consulting official sources.  
• Document Compliance: Businesses must ensure to fulfil the eligibility criteria and keep meticulous records to keep their practices aligned with tax regulations and maximise their VAT exemption benefits.  
• Monitor Market Trends: The VAT exemption could influence the demand and value of gold. Therefore, gold-trading businesses need to stay aware of these changes to make informed decisions. 

Key takeaways 

A 5% VAT is applied on most gold products; however, the treatment varies depending on the type and purity of the gold. Here are some key points to keep in mind:- 

• The exemption for VAT on gold in Dubai applies to high-purity gold products and only between VAT-registered entities. 
• Businesses that want to benefit from the VAT exemption must comply with documentation and eligibility criteria. 
• The reverse charge mechanism only applies to gold items, not to related services such as making charges, unless they are considered a single composite supply. 
• A 0% VAT is applied on gold bullion and other investment-grade gold products with a 99% or higher purity. However, suppliers can still reclaim any input VAT paid.  
• Non-investment grade gold items are subject to the standard 5% VAT. This applies to gold items with a purity below 99%, including many decorative and personal-use gold items.  
• The government implemented this VAT structure to support the investment market for gold while maintaining revenue on commercial gold products.  

VAT application on Gold Jewellery: Making Charges 

The Federal Tax Authority (FTA) issued VATP029, clarifying the treatment of VAT on gold-making charges. The key points include:- 

1. Single Composite Supply 

When the price of gold and making charges are coupled, 

VAT is applied to the total supply under the Reverse Charge Mechanism (RCM), in the following cases: 

• Gold product is the primary element, and the making services are subsidiary. 
• The total amount for gold and making services is the overall cost. 
• The same supplier supplies the Gold items and making services.  

2. Multiple Supplies 

As per the requirements of Cabinet Decision No. 25 of 2018, a standard VAT rate of 5% is applied if making charges are billed separately, while the gold items fall under the Reverse Charge Mechanism. 

Conclusion 

With our professional tax services, you can enjoy a seamless gold-trading experience with full VAT compliance. Our tax advisors will provide tailored tax consultancy services, helping businesses understand the implications of VAT and optimize their tax strategy. 

For more detailed information on UAE VAT policies and treatment of VAT on gold in Dubai, contact our tax experts.