Why do gold and diamond traders follow a different VAT mechanism than everyone else?

In an ordinary transaction, the seller collects VAT from the buyer and remits it to the authority. In gold, diamond, and precious metal trading between two VAT-registered parties, that flow is reversed: the seller doesn't charge VAT at all, and the buyer self-accounts for it on their own return instead. The reason comes down to the nature of the sector — high transaction values against thin profit margins. If the seller had to collect full VAT on every deal, it would create genuine cash-flow strain on the buyer, who is usually reselling or manufacturing with that stock and hasn't yet recovered the VAT as an input. The mechanism also closes off a real risk: a seller collecting VAT on a high-value sale and disappearing before ever remitting it to the authority.

The mechanism traces back to Cabinet Decision No. 25 of 2018, later expanded by Cabinet Decision No. 127 of 2024 to cover gold, silver, platinum, and palladium, plus natural and manufactured diamonds, pearls, rubies, and emeralds, along with jewellery where the metal or stone's value exceeds the rest of the piece. Applying it is conditional, though: both parties must be VAT-registered, and the buyer must provide a written declaration before the transaction confirming the goods will be used for resale or manufacturing rather than personal use — if either condition is missing, standard VAT collection applies instead.

At RASEEKH, we help gold and diamond traders confirm each transaction actually meets these conditions before it goes into the return, so a reverse-charge deal and a standard one never get mixed up in the same set of books.