Dubai Rolls Back VAT on Gold

May 4, 2018 Taxation in UAE

Tax on gold in DubaiABU DHABI – The gold and diamond trade in the UAE should pick up again, as the government rolls back VAT for these luxury items.

On May 2nd the government of the United Arab Emirates announced that it will implement a new tax mechanism to eliminate VAT on the wholesale of precious metals.

Earlier this year the government introduced a general VAT of 5 percent on all items, aside from education, healthcare, and basic food items.

The government has announced that a reverse-charge mechanism will now be implemented during the sale of gold and other precious metals.

The mechanism is aimed at impacting wholesalers and overseas suppliers, and will see the GST obligation transferred to the sale of the item to a retail buyer.

Some figures have suggested that the implementation of the VAT in January lead to a drop in trade in precious metals and jewellery by as much as 60 percent.

The government hopes that the reverse-charge mechanism will secure the UAE’s standing as a country with a notable ease of doing business.

Since the announcement, jewellery retailers have become vocal in their suggestion for the implementation of a similar system for the entire jewellery industry, and not just B2B activity.