GCC Chambers study calls for review of VAT on gold, jewelry

The Federation of GCC Chambers Project has forwarded recommendations calling for reviewing the introduction of VAT on jewelry, gold, precious and semi-precious stones industry.

The Federation of GCC Chambers Project (FGCCC) has forwarded recommendations and baseline study findings to the General Secretariat of the Gulf Cooperation Council (GCC) calling for reviewing the introduction of the value-added tax (VAT) on jewelry, gold, precious and semi-precious stones industry including pearls.

“The study provided to the GCC addressed the impact of VAT on gold and jewelry sectors,” said an official at the FGCCC to Al-Eqtisadiah local daily. He also mentioned that the study has indicated that gold ore represents the “capital” and not a personal good or stock, as they are quantities belonging to wholesalers, retailers, individuals, and gold factories.

Therefore, imposing tax either on all or part of the value will represent a loss in the income of the value-capital ‘gold ore” and an overrun in the concept of private property.

Moreover, the study conducted a series of comparisons as they are practiced in other countries in the area concerning the introduction of the VAT on the gold jewelry industry, stating that it was submitted to FGCCC for an appropriate action of supporting the gold jewelry sector.

According to the study explained by the official, imposing VAT shall not exceed one of the recommended actions exempting the whole value of jewelry, precious, semi-precious stones and pearls.

Another solution would be applying VAT in a fixed amount or a previous profit margin by knowing the customs administration in the countries that started applying VAT. This means it should be equal to 12% of the value of jewelry as applied in neighboring Arab countries.

The recommendations include applying VAT only on the factory value and remuneration from jewelry, precious and semi-precious stones as it represents the added value that can be an actual tax, where so many workshops and small factories have no capital from gold, but only provides drafting services where they receive the gold quantities to be formulated for traders in exchange for remuneration.

According to the study, gold workshops do not necessarily have to be one of the parts who exchange with other parties in the gold industry. So, gold formulating and industry is not considered as consumables.

Courtesy: zawya.com