VAT for gold and jewellery traders in the UAE: reverse charge, investment gold and making charges (2026)

Dubai's gold trade runs on thin margins and large invoice values, which is why VAT errors in this sector are so expensive. The rules were rewritten in 2025: Cabinet Decision No. 127 of 2024 replaced the 2018 gold-and-diamonds decision with effect from 26 February 2025, and the FTA's Public Clarification VATP043 explains how to apply it. This article sets out what a trader, wholesaler, manufacturer or retailer needs to get right today.

1. The reverse charge now covers most of the trade

When both the supplier and the buyer are VAT-registered and the buyer intends to resell the goods or use them to make or process other precious goods, the buyer — not the seller — accounts for the VAT. The seller issues a tax invoice without charging VAT and states that the reverse charge applies; the buyer declares the output VAT in its own return and, where entitled, recovers the same amount as input VAT in that return. For a fully taxable trader the cash effect is nil, which is the point: it removes the need to finance 5% VAT on every wholesale purchase.

"Precious goods" under the 2024 decision are:

• precious metals — gold, silver, palladium and platinum;
• precious stones — natural and manufactured diamonds, pearls, rubies, sapphires and emeralds;
• jewellery made from those metals or stones, provided the value of the precious metals or stones exceeds the value of the other components.

That last test matters. A gold bangle qualifies; a watch where the movement and case are worth more than the gold does not, and must be invoiced with 5% VAT in the normal way.

2. The conditions — all of them, every time

The reverse charge is not automatic. It applies only when, for each supply:

1. the buyer is VAT-registered — the seller must check the TRN using the FTA's verification tool, not just take it from the purchase order;
2. the buyer gives the seller a written declaration before the date of supply, confirming its VAT registration and that the goods will be resold (wholesale or retail) or used, wholly or partly, to produce or manufacture precious goods — a retailer buying for its shop, or a manufacturer buying semi-finished components, both qualify;
3. the seller keeps that declaration and the TRN-check confirmation with the invoice, and the tax invoice states that the reverse charge applies (the particular required by Article 59(1)(l) of the Executive Regulation);
4. the supply is not a zero-rated export and is not out of scope — for example where ownership passes to the buyer inside a designated zone.

If any condition is missing — the declaration is dated after the date of supply (the earliest of delivery, invoice and payment), the buyer's TRN turns out to be cancelled, the buyer is an end consumer — the seller must charge and account for 5% VAT. VATP043 adds a second consequence that traders often miss: where the buyer failed to give the declaration, the buyer cannot recover the input VAT on that purchase even if it holds a valid tax invoice. A late declaration therefore costs both sides, and cannot be cured afterwards.

3. Making charges: what changed

Making or workmanship charges were the sore point of the 2018 rules: the gold was reverse-charged while the making charge was treated as a separate standard-rated service, and traders and the FTA argued over which was which. The position is now settled, in two steps. From 1 January 2023 a making service bundled with gold or diamonds for a single price can form part of one composite supply; from 26 February 2025 the same applies to all precious goods. VATP043 sets the test: the precious goods are the principal component and the making service is ancillary (or the two are so closely linked that splitting them would be unnatural); one price is charged, not separate prices; and the same supplier provides both. Meet those and the whole amount — metal and making — is one composite supply under the reverse charge, invoiced at a single price with a statement that the reverse charge was applied. Charge the making separately on the invoice and there are two supplies: the goods under the reverse charge and the making service at 5%.

Practical consequence: review how your invoice template is built. A wholesaler who still splits "gold value" and "making charges" into two lines may be charging 5% that the buyer then has to fund and recover, or worse, applying the reverse charge to a service that does not qualify.

4. Investment gold is different — it is zero-rated

Separate from the reverse charge, Article 36 of the VAT Executive Regulation zero-rates the supply and import of investment precious metals: gold, silver and platinum of 99% purity or more, in a form tradeable in global bullion markets (bars, ingots, wafers and coins of that standard). Palladium is not on that list — it is reverse-charged between registrants but never zero-rated. Zero-rating applies whoever the buyer is — including a retail customer or an unregistered company — and the seller may still recover input VAT on its related costs. Jewellery, however pure the gold in it, is never investment gold; nor are 22-carat bars, which fall short of 99%.

A bullion dealer therefore has three invoice types to manage: zero-rated investment metal, reverse-charged precious goods to registered buyers, and 5% VAT on everything else.

5. Imports, exports and designated zones

• Imports of precious goods by a registered trader are accounted for under the import reverse charge on the return, and the customs value must reconcile to the figure the FTA pre-populates.
• Exports to a customer outside the UAE are zero-rated provided the goods physically leave within 90 days of the date of supply and the exporter keeps both official (customs) and commercial evidence of export. The domestic reverse charge does not apply to an export.
• Designated zones — where ownership of goods bought for resale passes to the buyer inside a designated zone, the supply is outside the scope of VAT and the domestic reverse charge does not apply; goods consumed in the zone or moved to the mainland come back into charge. Keep the movement and transfer-of-ownership records.

6. The errors we see most often

• Applying the reverse charge to a sale to an unregistered buyer, or to a buyer whose declaration was signed after the date of supply.
• Treating 22-carat bars or coins as zero-rated investment gold.
• Reverse-charging a watch or stone-set piece where the precious content is less than half the value.
• Reverse-charging an itemised making charge.
• Reporting reverse-charged purchases as output VAT only, and forgetting the matching input VAT — which quietly overpays the FTA every quarter.
• Applying the reverse charge to supplies made before 26 February 2025 of silver, platinum, palladium, coloured stones or pearls — the decision has no retrospective effect; only gold and diamonds were covered before that date.
• Buying under the reverse charge and then using the goods for something other than resale or manufacture — a gift, a partner's personal purchase, a permanent display piece — without accounting for the change of use.

7. If you have been invoicing the old way

Errors found in past returns are corrected by voluntary disclosure. Where the net under-declared tax in a return exceeds AED 10,000, the disclosure must be filed within 20 business days of discovering the error; smaller amounts can be corrected in the next return. Disclosing first is always cheaper than being assessed — the fixed penalty is AED 1,000 for a first disclosure (AED 2,000 for a repeat), plus a percentage penalty that rises the longer the delay. We prepare and file voluntary disclosures from AED 1,499.

What good looks like

A trader who is compliant today has: a written declaration on file for every registered buyer, refreshed when their registration changes; a TRN-check step in the sales process; an invoice template that states "VAT reverse-charged under Cabinet Decision 127 of 2024" on qualifying lines; separate product codes for investment metal, precious goods and standard-rated items; and a quarterly return review that ties reverse-charged purchases to both the output and input boxes.

That is the setup we build for gold and jewellery clients as part of our quarterly VAT return service — returns from AED 499 a quarter, with every figure traced to the books. Ask for a proposal, or check the next VAT due date.

Sources: Cabinet Decision No. 127 of 2024 on the application of the reverse charge mechanism to precious metals and stones among registrants (in force 26 February 2025); FTA Public Clarification VATP043; Federal Decree-Law No. 8 of 2017 on VAT, Article 45 (investment precious metals) and its Executive Regulation. This article is general information, not advice on a specific transaction.