UAE: VAT imposed on gold items, jewelry

Suppliers must impose VAT on the service of making an item of jewelry if a separate fee for the service is identified and charged by the jeweler

Suppliers must impose VAT on the service of making an item of jewelry if a separate fee fo

The tax authority of the United Arab Emirates issued guidance to clarify the application of value added tax (VAT) with regard to the fee received for the crafting of items of gold by jewelers.

The new VAT clarification—VAT Public Clarification VATP029—specifies that suppliers of gold items must impose VAT on the service of making an item of jewelry if a separate fee for the service is identified and charged by the jeweler. This rule applies only to gold and products consisting mostly of gold (referred to as “gold items”) that are subject to VAT under a special reverse-charge mechanism.

The clarification confirms that when the supplier charges a single price for the gold item, the supply can be construed as a single composite supply of a gold item subject to VAT under the reverse-charge mechanism. However, when the charge for the crafting service is reflected separately, the supplier will be regarded as making multiple supplies and will be required to apply the correct VAT treatment to each separate component.

Read a June 2022 report prepared by the KPMG member firm in the United Arab Emirates

 

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