Gold is one of the most valuable and widespread assets in Saudi Arabia, whether for saving, investment, or adornment. With the increasing demand for gold of all types, a common question arises: Is there a tax on gold in Saudi Arabia?
In this article, we explain to you the complete picture of the gold tax in Saudi Arabia in a simple and accurate manner, according to the applicable regulations.
Is there a tax on gold in Saudi Arabia?
Yes, gold in Saudi Arabia is subject to Value Added Tax (VAT), but not in the same way for all types.
The tax system differentiates between gold as a consumer good and gold as an investment asset, which causes confusion for many buyers.
What is Value Added Tax (VAT) in Saudi Arabia?
Value Added Tax (VAT) is an indirect tax levied on most goods and services. It has been implemented in the Kingdom since 2018, initially at 5%, and then increased to 15% in July 2020. This tax aims to diversify economic revenue sources and enhance transparency. According to the General Authority of Zakat, Tax and Customs (ZATCA), VAT is levied at various stages of supply, with specific exemptions for investment goods such as certain types of gold.
For gold, the application varies depending on its type: is it pure investment gold or gold jewelry? This distinction determines whether the tax is 0% or 15%.
Value Added Tax on Investment Gold (Tax on Bullion and Pure Metals)
Investment gold is exempt from VAT at a rate of 0%, subject to certain conditions. According to the ZATCA guidelines, these include:
- The main conditions for exemption :
- The purity of the gold is no less than 99%.
- Form: Ingots, chips, plates, or certified coins.
- Purpose: Investment, not industrial or decorative use.
This exemption applies to the initial supply of the product, import, and export, making bullion an attractive option for investors seeking to preserve the value of their money without significant additional costs. For example, if you purchase a pure gold bullion with 99.9% purity, you will not pay VAT on its base value, but any associated additional services such as shipping or storage may be taxed if they are not part of the investment supply.
Value Added Tax on Jewelry and Gold Items
Unlike pure bullion, gold jewelry is subject to a 15% value-added tax (VAT). This includes necklaces, rings, and bracelets, even if they are made of high-purity gold. The reason is that they are not classified as investment metals, but rather as consumer goods that involve additional manufacturing processes.
- How it's applied : The tax is calculated on the total value of the item, including any additions such as gemstones or designs. However, if investment metals are used in manufacturing, VAT is applied to the production process itself.
- Importation : If the jewelry is imported, tax may be levied upon customs clearance, with the possibility of deducting it as input if you are registered in the VAT system.
This makes buying jewelry more expensive compared to bullion, but it reflects the consumerist nature of these products.
How to calculate gold tax in general
To calculate VAT, follow these simple steps:
- Specify the type of gold: If it is an investment qualifying gold, VAT = 0%.
- For jewelry: Calculate 15% of the total value before tax.
- Example: If the value of a piece of jewelry is 10,000 riyals (before VAT), then the tax = 10,000 × 0.15 = 1,500 riyals, and the total = 11,500 riyals.
Important tips before buying gold in Saudi Arabia
- Make sure the gold is classified as either investment or consumer gold.
- Request a clear tax invoice.
- Check the purity level.
- Ask the merchant frankly: Is gold subject to or exempt from tax?
- Don't confuse tax and manufacturing costs when making a purchase decision.
Understanding gold tax in Saudi Arabia helps you make a smart decision whether you are a jewelry buyer or a long-term investor.
The difference between investment gold and jewelry is not merely cosmetic; it directly affects the final cost and financial viability.
If you plan to buy gold, tax knowledge is not a luxury, but a necessity.
Frequently asked questions about gold trading in Saudi Arabia
How do I calculate the gold price including tax?
To calculate the final price of the gold piece, the current gold price is combined with the manufacturing cost, then the result is multiplied by the weight of the piece in grams, and then VAT is added to the total.
The process begins by first finding out the current price of gold from a reliable source, then determining the agreed-upon manufacturing fee, so that the final cost can be calculated accurately and clearly before purchasing.
Is VAT imposed on the sale of used gold?
Yes, VAT is imposed on the sale of used gold if the supply is subject to tax according to the applicable regulations. In this case, the seller can deduct input tax that has already been paid, according to the applicable tax mechanism and the type of registered activity.