The UAE has introduced new value-added tax (VAT) rules for businesses dealing in gold, diamonds, and other precious materials. The Ministry of Finance (MoF) announced the update on Friday, which expands the ‘reverse charge mechanism’ to include traders in these sectors.

Under this updated system, suppliers are no longer responsible for charging and collecting VAT on these goods. Instead, buyers will now calculate and declare the VAT on their purchases and report it in their VAT returns. This process ensures that buyers directly pay the tax to the government.

The MoF clarified that the rule applies to precious metals like gold, silver, palladium, and platinum, as well as precious stones, including diamonds, pearls, rubies, sapphires, and emeralds. It also includes jewellery made from these materials, provided their value exceeds that of other components used in the item.

The changes come under Cabinet Decision No. (127) of 2024, which aims to strengthen the precious metals and gemstones trading sector in the UAE. The ministry stated that this move demonstrates the government’s commitment to supporting business growth and aligning with global best practices.

This regulatory update is expected to bring significant benefits to the industry, fostering a better environment for traders in the country.