Gold Tax in UAE: 5% VAT, RCM & Tourist Refund

The standard gold tax in uae is 5% applicable to all retail jewelry purchases, regardless of purity. VAT applies to the gold value and the making charges. Gold tax in uae depends not only on the type of gold but also on the nature of the transaction.

The UAE implemented a reverse charge mechanism for business-to-business transactions when the gold meets the qualifying metal criteria, and if the buyer and the seller are VAT registered in the UAE, the seller does not collect gold tax in UAE at the point of sale; instead, the buyer reports and pays VAT directly.

Does VAT apply to gold in the UAE? 

Yes, if you are purchasing jewellery in 2026, the UAE has implemented a 5% gold tax. The specific tax treatment on your invoice is determined by the type of gold, specifically investment-grade gold, which has 99% purity or more and may qualify for zero-rated treatment.

• For business-to-business transactions involving gold, the UAE has introduced a reverse charge method for vat in uae. This means that if both the buyer and the seller are VAT registered in the UAE, the seller does not collect VAT at the point of sale, but the buyer reports and pays it directly.
• This reverse adjustment enhances cash flow for gold traders by eliminating the need to fund VAT, which does not apply to retail or consumer purchases.
• Tourist refund: By claiming VAT refunds in Dubai, travellers who purchase gold jewellery in Dubai can recoup up to 85% of the VAT paid after processing expenses.
• For non-registered purchasers, gold tax in uae is included in the price.

Misconception alert: 

The assumption that the Reverse Change Mechanism makes a transaction ''tax free'' is not true the seller does not collect VAT at the point of sale, but the tax itself is not withdrawn, and the burden shifts to the buyer. 
 

When 5% VAT is charged on gold  

Gold that doesn't meet the criteria of investment grade is subject to the 5% gold tax. This includes:

•  Purchase 18K, 21K, 22K, or 24K gold jewellery at retail stores. 
• Gold coins that do not meet the 99% purity standard.
•  Buying scrap gold or outdated ornaments from unregistered individuals.
• The VAT applies to the total taxable amount shown on the vat invoice.

Making charges: is VAT charged on gold making charges?

Making charges is the costs associated with creating and designing gold ornaments. 

• People get confused about this point, when the supplier charges a single price for both the goods and the making services such as manufacturing jewelry all the rcm conditions are met, this may be treated as single composite supply subject to the RCM. 
• If the suppliers separate the charges for the goods and manufacturing jewelry, then this becomes multiple supplies, making services remain subject to the standard VAT treatment. Suppliers must carefully choose whether they are making a single or multiple supply and apply the correct gold tax in uae. 

“Daftra helps split gold vs making charges correctly so VAT treatment stays clean”.

 

Reverse Charge Mechanism (RCM) on gold & jewellery (B2B): when VAT is NOT charged by the supplier 

The Reverse Charge Mechanism (RCM) on gold and jewellery in the UAE is a VAT compliance mechanism in which the VAT-registered buyer, not the supplier reports and pays the 5% gold tax in uae on B2B transactions to the Federal Tax Authority (FTA).This applies to gold, silver, and precious stones, to improve cash flow and decrease fraud.  

Goods covered

• Goods such as jewellery or items where the value of precious metals or gemstones is higher than other components.
• Precious Metals: Gold, silver, palladium, and platinum.
• Gemstones: Diamonds, pearls, rubies, sapphires, emeralds, both natural and synthetic.

Conditions

• The supplier and recipient must both be VAT registered in the UAE on the date of supply.
• The goods must meet the new criteria, which includes precious metals,stones, and jewellery with a high concentration of valuable content.
• The recipient must provide the supplier with a written declaration verifying registration and that the items were purchased for resale or further processing, not for personal use.
• The tax invoice must clearly state that a reverse charge applies and exclude gold tax in uae from the total amount charged.
• The supplier must validate the buyer's TRN verification in the UAE and keep the declarations for audit purposes.

‘’If any of these conditions are missing legally, the supplier must typically charge 5% VAT.

How to calculate VAT on gold (practical examples, including 22K per gram)

Here are the examples of How to calculate vat in the UAE: 

Retail example:

VAT = 0.05 (Gold Value + Making Charges).

Weight: 10 gram.

Making charges: 500.

Gold Rate: 250 per gram.

Gold value: 10 ×250=2,500 

VAT = 0.05 ( 2,500+500)= 150 

B2B RCM: 

Supplier: If the total price is 500,000 AED, VAT=0

The buyer accounts in the UAE VAT return for 25,000 AED output tax and 25,000 AED input tax, therefore resulting in zero.
 

Tourist VAT refund on gold purchases in Dubai/UAE 

 To ensure a successful Dubai VAT Refund Guide for Tourists, tourists are advised to keep all original receipts bearing the tax-free sticker. It is also important to ensure that the invoice bears a Tax-Exempt stamp, or a QR code if it is electronic. The tax exemption must be activated within 90 days of the purchase date.

Eligibility requirements: 

• Non-resident status requires that you have visited the UAE on a tourist visa.
•  Minimum age: You must be 18 or older. Minimum spend: Each qualifying transaction must cost at least AED 250 (including gold tax in uae). Purchases under this amount from a single store cannot be claimed.
• Registered retailer: The store must be registered with Planet Tax Free for the Tourist Refund Scheme.

Compliance checklist for gold & jewellery sellers (and how Daftra helps) 

If you want to claim a gold tax in uae Exemption you must have the right documents in place they are: 

• Tax invoice: You must show the full details of the transaction which include TRN,gold value and making charges.
• Purity certificate: confirms that the gold is 99% or more and this is required for VAT exemption in UAE.
• TRN of buyer and seller: it proves that both are VAT registered and necessary for B2B exemptions. 

The importance of Daftra in VAT Calculation

Daftra has an online uae VAT calculator that is designed to help businesses, freelancers and individuals quickly calculate VAT in UAE on goods and services to ensure accurate addition or removal of VAT.