# VAT on gold and diamonds in the UAE: a practical guide for traders

> VAT on gold and diamonds UAE explained: reverse charge mechanism, investment grade exemptions, registration rules, and invoicing requirements.

Source: https://einvoicedirect.ae/uae-vat/vat-on-gold-and-diamonds-uae  
Last updated: 2026-06-05  
Publisher: EInvoice Direct (Massive FZCO), UAE e-invoicing software.

## What is VAT on gold and diamonds in the UAE?

VAT on gold and diamonds UAE refers to the value added tax rules that apply when businesses sell, buy, or trade gold, diamonds, and related jewellery products inside the United Arab Emirates. The standard VAT rate of 5% applies, but a special reverse charge mechanism shifts the tax accounting to the buyer when both parties are VAT registered traders dealing in these goods.

This guide explains how the rules work, who qualifies, and what your invoices and returns need to show. For wider context on the tax system, see our [UAE VAT](https://einvoicedirect.ae/uae-vat) hub.

## The basics: 5% VAT and the standard rule

VAT in the UAE has applied at a standard rate of 5% since January 1, 2018, under Federal Decree-Law 8 of 2017. Gold and diamonds are not zero-rated or exempt by default. A jeweller selling a gold ring to a walk-in retail customer charges 5% VAT on the full sale price, including the value of the metal, the stones, and the making charge.

The mandatory VAT registration threshold is AED 375,000 of taxable supplies in a 12 month period. The voluntary threshold is AED 187,500. Most active gold and diamond traders in Dubai and Sharjah cross the mandatory threshold quickly because of the high value of stock.

### What counts as gold and diamonds for VAT purposes

UAE rules cover a broad set of goods in this category:

- Gold in raw form, bars, ingots, and granules
- Diamonds, both rough and polished, loose or set
- Jewellery and ornaments made from gold or diamonds
- Products where gold or diamonds form the principal component

Silver, platinum, and other precious metals follow related but separate guidance, so always check the specific commodity before applying any special rule.

## Investment grade precious metals: the zero rate

Some forms of gold are zero-rated rather than taxed at 5%. To qualify as investment precious metal, the supply must meet strict criteria set by the Federal Tax Authority (FTA).

### Conditions for zero rating

The metal must be gold, silver, or platinum with a purity of 99% or higher. It must also be in a form tradable on global bullion markets. A 24 karat gold bar with a recognised refiner stamp typically qualifies. A 22 karat gold chain does not, because the purity is below 99% and the form is jewellery rather than bullion.

If your supply qualifies, you charge 0% VAT but still report the sale on your VAT return as a zero-rated supply. You can also recover input VAT on related costs.

| Product type | Typical VAT treatment | Example |
| --- | --- | --- |
| Investment grade gold bar, 99.5% pure | Zero-rated (0%) | 1 oz LBMA gold bar |
| 22 karat gold jewellery | Standard rated (5%) or reverse charge | Gold bangle sold to consumer |
| Polished diamond, loose | Standard rated (5%) or reverse charge | Wholesale stone to a jeweller |
| Diamond ring | Standard rated (5%) | Engagement ring sold to consumer |
| Gold scrap traded between dealers | Reverse charge (if conditions met) | Scrap sold to a refiner |

## The special reverse charge mechanism for gold and diamonds

The most distinctive feature of VAT on gold and diamonds UAE is the special reverse charge mechanism introduced by Cabinet Decision 25 of 2018. It removes the cash flow burden of charging and collecting 5% on every business to business (B2B) trade between registered dealers.

### How the reverse charge works

When a VAT registered supplier sells gold, diamonds, or qualifying products to a VAT registered buyer who intends to resell, refine, or use them to produce new goods, the supplier does not charge 5% VAT on the invoice. Instead, the buyer self-accounts for the VAT in their own return, declaring it as both output tax and input tax in the same period. The net cash effect is usually zero.

This treatment is mandatory when the conditions are met. It is not optional. A wholesaler cannot decide to keep charging 5% to a registered jeweller buyer who has submitted a valid written declaration.

### Conditions for the reverse charge

- The supplier and the buyer are both registered for UAE VAT and hold valid Tax Registration Numbers (TRNs).
- The goods sold are gold, diamonds, or products where the principal component is gold or diamonds.
- The buyer intends to resell the goods or use them to produce or manufacture other gold or diamond products.
- Before the supply, the buyer provides a written declaration confirming the resale or production intent and confirming registration.
- The supplier retains the declaration and a copy of the buyer's VAT certificate.

If any condition fails, the supplier must charge 5% VAT in the normal way.

### Worked example

A Dubai wholesaler sells AED 500,000 of polished diamonds to a registered jewellery manufacturer who signed a valid declaration. The invoice shows AED 500,000 with no VAT added and a note stating that the reverse charge mechanism applies under Cabinet Decision 25 of 2018. The manufacturer reports AED 25,000 as output VAT and AED 25,000 as recoverable input VAT in the same return. The wholesaler reports the sale as a supply subject to reverse charge.

## Retail sales: when 5% still applies

Reverse charge does not apply to retail sales. A jewellery shop selling to a tourist, a resident, or an unregistered business charges 5% on the full price.

### Making charge and VAT

VAT applies to the entire consideration, including the making charge. If a 22 karat gold necklace has a metal value of AED 9,000 and a making charge of AED 1,000, the invoice total is AED 10,000 plus AED 500 VAT.

### Old gold exchange

Many UAE jewellers accept old gold as part payment for new pieces. VAT still applies to the new piece at its full value. The treatment of the old gold trade-in depends on whether the customer is a registered business or a private individual, and whether documentation supports a reduced taxable amount.

## Invoicing requirements

Tax invoices for gold and diamond transactions must follow the standard FTA invoice rules and add specific notes where the reverse charge applies.

### Reverse charge invoice content

- Supplier name, address, and TRN
- Buyer name, address, and TRN
- Invoice date and sequential number
- Description, quantity, and purity or carat weight of the goods
- Total amount payable, with no VAT added
- A clear statement that the supply is subject to the reverse charge mechanism for gold and diamonds, with reference to Cabinet Decision 25 of 2018

With the upcoming move to the UAE's Peppol 5-corner DCTCE (Decentralized Continuous Transaction Control and Exchange) e-invoicing model in PINT AE format, these data points will need to flow in a structured electronic invoice rather than a paper or PDF document.

## Registration, returns, and record keeping

Any business trading in gold or diamonds at scale will exceed the AED 375,000 mandatory registration threshold quickly. Once registered, the trader files VAT returns within 28 days of each tax period end.

### What to keep on file

- Buyer declarations for every reverse charge transaction
- Copies of buyer VAT certificates verifying TRN
- Tax invoices and credit notes for at least 5 years
- Inventory records reconciling stock movements with sales
- Import documentation for stock brought in from outside the UAE

For cross border supply rules that affect importers and exporters of bullion and jewellery, see our guides to [VAT on Imports UAE](https://einvoicedirect.ae/uae-vat/vat-on-imports-uae) and [VAT on Export Services UAE](https://einvoicedirect.ae/uae-vat/vat-on-export-services-uae).

## Common pitfalls for UAE gold and diamond traders

### Treating every B2B sale as reverse charge

Some suppliers apply reverse charge by default to any buyer who claims to be registered. Without a written declaration on file before the supply, the FTA can challenge the treatment and assess the supplier for unpaid VAT plus penalties.

### Missing the investment grade test

Selling a 22 karat coin as zero-rated investment metal is a common error. The 99% purity threshold and the tradable form requirement are both strict. When in doubt, charge 5% and document the analysis.

### Mixing exempt, zero-rated, and standard supplies

A trader who sells investment bars, retail jewellery, and B2B diamonds in the same month must split each transaction into the correct category on the return. This is similar to the mix of treatments found in other regulated sectors. For comparable sector specific rules, see [VAT on Real Estate UAE](https://einvoicedirect.ae/uae-vat/vat-on-real-estate-uae), [VAT on Financial Services UAE](https://einvoicedirect.ae/uae-vat/vat-on-financial-services-uae), [VAT on Healthcare UAE](https://einvoicedirect.ae/uae-vat/vat-on-healthcare-uae), and [VAT on Education UAE](https://einvoicedirect.ae/uae-vat/vat-on-education-uae).

## How e-invoicing changes gold and diamond VAT compliance

From January 1, 2027, Phase 1 of UAE mandatory e-invoicing applies to large businesses with revenue of AED 50 million or more. Smaller businesses follow on July 1, 2027, and government entities on October 1, 2027. ASP appointment for Phase 1 is due by October 30, 2026, with a pilot in Q2 2026.

Penalties under Cabinet Decision 106 of 2025 range from AED 2,500 to AED 50,000 per violation. Gold and diamond traders should plan for structured tax invoices that carry TRN, item level purity, and the correct reverse charge indicator codes in PINT AE.

For the latest official guidance, refer to the [UAE Federal Tax Authority](https://tax.gov.ae), the [UAE Ministry of Finance](https://mof.gov.ae), and the [MoF e-invoicing portal](https://einvoicing.mof.gov.ae). You can also revisit the [UAE VAT](https://einvoicedirect.ae/uae-vat) hub for related sector guides.

## Ready to get your invoices right

EInvoice Direct is UAE e-invoicing software built for the Peppol DCTCE model, with an accredited service provider (ASP) included at no extra charge. If you trade gold, diamonds, or jewellery and want a system that handles reverse charge indicators, PINT AE formatting, and FTA-ready records, [get UAE e-invoicing pricing](https://einvoicedirect.ae/for-businesses#contact) from our team.

## Frequently asked questions

### Is VAT charged on gold in the UAE?

Yes, VAT applies to most gold sales in the UAE at the standard rate of 5%. The main exceptions are investment grade gold of 99% purity or higher in a form tradable on global bullion markets, which is zero-rated, and B2B sales between registered traders that qualify for the special reverse charge mechanism under Cabinet Decision 25 of 2018.

### How does the reverse charge mechanism for gold and diamonds work?

When a VAT registered supplier sells gold, diamonds, or qualifying products to a VAT registered buyer who intends to resell or use them in production, the supplier issues an invoice without 5% VAT. The buyer self-accounts for the VAT in their return as both output and input tax. A written declaration from the buyer must be on file before the supply.

### Is investment gold zero-rated in the UAE?

Investment grade gold is zero-rated in the UAE when it meets the Federal Tax Authority's criteria. The gold must be 99% pure or higher and supplied in a form tradable on international bullion markets, such as a recognised refiner's bar. Standard 22 karat or 18 karat jewellery does not qualify and is taxed at 5%.

### Do I charge VAT on the making charge for jewellery?

Yes, VAT at 5% applies to the entire consideration for retail jewellery, including both the value of the metal and stones and any making, design, or labour charge. The tax invoice should show the total taxable amount and the VAT charged. If the sale qualifies for the reverse charge mechanism between registered traders, no VAT is added at all.

### What documents must a gold trader keep for VAT?

UAE gold and diamond traders must keep tax invoices, credit notes, buyer declarations for reverse charge sales, copies of buyer VAT certificates, import and export documents, and inventory records that reconcile stock movements. Records must be retained for at least 5 years and presented to the Federal Tax Authority on request. Electronic records that meet FTA standards are acceptable.

### Do tourists pay VAT on gold in the UAE?

Tourists pay 5% VAT on retail jewellery purchases in the UAE at the point of sale. They may reclaim a portion of the VAT through the Tourist Refund Scheme operated by the Federal Tax Authority when they leave the country, provided the goods, invoice, and exit procedures meet the scheme's conditions. Investment grade gold purchases are zero-rated.

### When does UAE e-invoicing apply to gold and diamond businesses?

Phase 1 of UAE mandatory e-invoicing applies from January 1, 2027 to businesses with annual revenue of AED 50 million or more. Smaller businesses follow on July 1, 2027, and government entities on October 1, 2027. Gold and diamond traders that exceed AED 50 million must appoint an accredited service provider by October 30, 2026 and prepare to issue PINT AE invoices.


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This content is informational and is not tax, legal, or financial advice.
For UAE e-invoicing pricing, see https://einvoicedirect.ae/for-businesses#contact