VAT Public Clarification – Gold – Making Charges

VAT Public Clarification - Gold - Making Charges

VAT Public Clarification – Gold – Making Charge

A new VAT public clarification has been issued by the Federal Tax Authority (FTA) on the Gold Jewellery business. The new Clarification guides applying the VAT on gold making and services-related charges are expected to significantly impact the gold jewellery businesses in the UAE in line with the current market practice.

Gold Industry background

In accordance with the VAT laws and regulations in the UAE, tax registrants supplying gold items and precious metals that are 99% purity do not impose VAT on the supply of the following requirements are met:

  • Customer/Recipient is registered for VAT and is a business, not an end-user (B2).
  • The supplier obtains a written declaration from the recipient confirming the following:
    1. Customer/Recipient will use the Gold Items to produce or manufacture other Gold Items or re-sell the Gold Items received.
    2. Customer/Recipient is registered for VAT on the date of supply.
    3. Customer/Recipient shall account for the VAT on the Gold Items supplied to him.

If all the above conditions are met, the Customer/recipient shall calculate VAT on the value of the Gold Items supplied to him and be responsible for all the tax obligations related to that supply. The recipient must report the VAT on such procurements under the Reverse charge mechanism (RCM) as per the prescribed conditions.


  • The public Clarification applies only to gold and products mostly of gold, which do not qualify for zero-rating and are taxable at a Standard Rate (i.e., 5%).
  • The export of Gold Items and the supply of precious investment metals do not qualify for the special reverse charge mechanism and, therefore, fall outside the scope of this Clarification.

Clarification provided by the FTA

Where the supplier supplies gold Items and makes services to a VAT registrant buyer (B2B), the supplier needs to consider whether the supply constitutes a single composite supply of a gold Item or multiple supplies consisting of both goods and services.

In the case of the Single Composite Supply: the customer/recipient to account for VAT under RCM for the entire supply value as the value of making charges could not be separately identified.

Supply of gold items along with making charges as a single composite supply where making charges are included in the value of gold. Other conditions:

  1. Gold item is the principal component, and making charges are ancillary/incidental elements or are so closely linked that they constitute a single supply which would be impossible or unnatural to split;
  2. The price for the Gold Item and the making charge are not separated; and
  3. The same supplier supplies the Gold items and the making service.

In case of Multiple supplies: The supplier to impose VAT at the standard rate (i.e., 5%) on the making charges. Recipient to account for VAT under RCM for the gold component only.

Supply of gold items along with making charges as multiple supplies. Making charges are separately identifiable. Other conditions:

  1. Supplier charges separately for the Gold Items and the making service, or
  2. The price of these components is separately reflected.

Read full Clarification

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