UAE says 5pc VAT for gold jewellery

Manama : Starting next year, UAE reportedly will install a five per cent Valued-added Tax on all gold jewellery sold there. 

A report carried by Khaleej Times says that the tax will be imposed on  “investment gold, silver and platinum jewellery with less than 99 per cent purity”.

It also says that the VAT will be “applicable on the whole jewellery piece rather than on the making costs charged by the goldsmiths”.

The report, however, confirms that the tax is not applicable to these metal with more than 99pc purity. 

Recently, the government also imposed 50pc excise duty on energy and carbonated drinks and 100pc on tobacco products in order to reduce the usage of these products among residents.

Reports say from 7 am, 1 January 2018 residents and visitors to the UAE will be liable to the VAT. 

According to a report by the National, Education, residential real-estate, public transport and medicine will not face tax a burden, however, the VAT will affect almost every sector in some way.

The report quoting Analysts say that the tax will “add a 2.5 per cent to the cost of living in the country with the government expecting to raise Dh12 billion in revenue from the tax in the first year alone”.

Meanwhile, Arabian Business citing IMF estimates that even this modest rate is expected to realise VAT revenues roughly 0.8% and 1.6% of GDP in the GCC countries.

VAT compliance requirements in UAE say that all businesses exceeding the mandatory VAT registration threshold of AED375,000 should register compulsory. 

Representatives of the six member states of the Gulf Cooperation Council (GCC) signed the VAT Framework Treaty early this year, confirming the introduction of a formal VAT system in all the member states.

Khaleej Times in its report warns that non-compliance will lead to steep penalties. “Entities which are within the VAT threshold will face a steep penalty of Dh20,000 if they fail to register within the specified time,” the report warns. 

The report also points out that “each non-compliance will attract penalties for the first offence and repeat offence will see significantly higher penalties and in some cases even lead to imprisonment”.