In the United Arab Emirates, value-added tax (VAT) is levied on the import of gold and diamonds into the country. Therefore, gold and diamond businesses in Dubai and the UAE must register for VAT to ensure they charge the correct tax rate on their products and services.
The standard rate of VAT in the UAE is 5%. However, businesses can choose to charge a reduced rate of 3% on certain items such as gold and diamonds. However, it is important to note that businesses can only charge the reduced rate if they are registered for VAT.
All You Need to Know on Vat Rules for Gold & Diamond Businesses in Dubai & The UAE. The United Arab Emirates (UAE) has a VAT of 5%, levied on the country’s supply of goods and services. The Federal Tax Authority (FTA) collects VAT from businesses and individuals not applicable to importing gold and diamonds into the UAE. However, businesses selling gold and diamonds must register for VAT and charge VAT on their supplies.
Businesses must maintain proper records of their transactions and submit periodic returns to the FTA. Non-compliance with VAT rules can result in penalties.
The UAE has entered into several Double Taxation Agreements (DTAs) with other countries, under which businesses may be exempt from paying VAT on their supplies.
Businesses engaged in the sale of gold and diamonds in the UAE must ensure that they comply with all VAT rules and regulations. Non-compliance can result in penalties from the FTA.
New rule for VAT on gold and diamonds.
As of January 1, 2018, businesses selling gold and diamonds must charge VAT on their supplies. This is a change from the previous rule, under which businesses were only required to pay VAT on importing gold and diamonds into the UAE.
The new rule applies to all businesses registered for VAT in the UAE, including those based outside the country. Businesses must charge VAT on all supplies of gold and diamonds, whether sold within the UAE or exported to another country.
Businesses must maintain proper records of their transactions and submit periodic returns to the FTA. Non-compliance with VAT rules can result in penalties.
The UAE has entered into several Double Taxation Agreements (DTAs) with other countries, under which businesses may be exempt from paying VAT on their supplies.
Businesses engaged in the sale of gold and diamonds in the UAE must ensure that they comply with all VAT rules and regulations. Non-compliance can result in penalties from the FTA.
When is VAT payable on gold and diamond purchases?
VAT is payable on the purchase of gold and diamonds when:
- The goods are delivered to the purchaser within the UAE;
- The purchaser takes possession of the goods outside of the UAE but within a “designated zone” defined by Federal Decree-Law No. 8 of 2017, which includes airports, seaports, and free zones.
What is the rate of VAT on gold and diamonds?
The standard rate of VAT in the UAE is 5%.
Are there any exemptions or discounts on VAT for gold and diamond purchases?
Yes, businesses may be exempt from paying VAT on their supplies of gold and diamonds under a Double Taxation Agreement (DTA). The UAE has entered into DTAs with several countries, including:
- Australia
- Belgium
- Canada
- China
- France
- Germany
- India
Businesses must provide evidence of their entitlement to an exemption under a DTA when making a VAT-exempt supply.
What are the documentation requirements for businesses selling gold and diamonds?
Businesses engaged in the sale of gold and diamonds must issue invoices to their customers that include the following information:
- The name, address, and VAT registration number of the supplier;
- A description of the goods or services supplied;
- The quantity or volume of goods supplied;
- The value of the goods or services supplied;
- The rate of VAT charged;
- The date of supply.
Invoices must be issued within 14 days of the date of supply.
What records must businesses selling gold and diamonds keep?
Businesses engaged in the sale of gold and diamonds must keep accurate records of their transactions, including:
- Invoices issued to customers;
- Receipts issued to customers;
- Contracts entered into with customers;
- Purchases made from suppliers;
- Returns submitted to the FTA.
Records must be kept for five years from the date of the transaction. Businesses may be required to produce their records for inspection by the FTA at any time.
What are the penalties for non-compliance with VAT rules on gold and diamonds?
The UAE’s Federal Tax Authority (FTA) can impose several penalties on businesses that fail to comply with VAT rules, including:
- A fine of AED 20,000;
- Imprisonment for a period of up to two years; and
- Closure of the business.
Penalties may be imposed for various offenses, including failure to register for VAT, failure to charge VAT on supplies, and failure to maintain proper records. In addition, repeat offenders may be subject to more severe penalties.
Businesses that are found to have deliberately evaded VAT may be subject to a fine of up to AED 50,000 and imprisonment for a period of up to five years.
What procedures are for businesses selling gold and diamonds to register for VAT?
Businesses selling gold and diamonds must register for VAT with the Federal Tax Authority (FTA). Registration can be done online through the FTA’s e-services portal.
Once registered, businesses will be issued a VAT registration certificate, which must be displayed at the business premises.
Businesses that fail to register for VAT may be subject to a fine of AED 20,000.
When do businesses selling gold and diamonds need to file their VAT returns?
Businesses selling gold and diamonds must file their quarterly VAT returns. Returns must be filed electronically through the FTA’s e-services portal.
The deadline for filing VAT returns is the 28th day of the month following the end of the quarter. For example, businesses with a fiscal year ending December 31 must file their first quarter VAT return by January 28.
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