Vat rule on gold and diamond

The Ministry of Finance (MoF) announced a change in the treatment of workmanship services in the provision of VAT on gold and diamonds between vendors in the country.

According to the decision, the term "goods" in Article (1) of Cabinet Decision No. (25) of 2018, which is related to Value Added Tax on Gold and Diamonds between Registrants in the State, will be temporarily substituted as "gold, diamonds, and any products whose main element is gold or diamonds, that can comprise of workmanship services directly linked to the supply of these commodities" until the end of 2022.

The definition in Cabinet Decision No. (25) of 2018 will be implemented again beginning in 2023. The FTA will provide taxpayers with more information about the amendments.

The Ministry of Finance's announcement of a change to the VAT treatment of workmanship services when supplying gold and diamonds between Registrants in the State is a good step. The amendment is intended to encourage domestic enterprises to engage in gold and diamond trading while also encouraging economic growth by providing businesses with a better understanding of the treatment of gold and diamond-related services.

The Federal Tax Authority (FTA) is expected to provide further guidance to taxpayers regarding the recently announced amendment.