DUBAI: Gold jewellery in the UAE will be subject to five per cent value-added tax (VAT) from January 1, 2018. According to Federal Tax Authority, VAT will be imposed on investment gold, silver and platinum jewellery with less than 99 per cent purity.
The VAT will be applicable on the whole jewellery piece rather than on the making costs charged by the goldsmiths.
However, VAT will not be levied on these metals with more than 99 per cent purity.
Thomas Vanhee, founding partner, Aurifer Middle East Tax, noted that under the new system, residents and tourists buying gold jewellery will have to pay tax on the whole piece rather than on the making charges. This means, a buyer will have to shell out Dh50 more while purchasing Dh1,000 worth of jewellery.
In the second-quarter of 2017, gold and jewellery sale in the UAE jumped nine per cent as compared to the same period last year. UAE consumer sales rose from 12.6 tonnes in Q2 2016 to 13.6 tonnes during the April-June period of this year, an increase of nine per cent. Jewellery demand rose in a similar percentage from 11.2 tonnes in Q2 2016 to 12.2 tonnes in Q2 2017, according to World Gold Council data.
Come 7am on January 1, 2018, the UAE will impose five per cent VAT on certain goods and services as part of the government’s efforts to generate new avenues of revenues. Recently, the government also imposed 50 per cent excise duty on energy and carbonated drinks and 100 per cent on tobacco products in order to reduce the usage of these products among residents.
