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The UAE Cabinet has recently approved the decision to introduce a new VAT Law on gold, diamonds and special metals at the wholesale level by applying the VAT reverse charge mechanism which moves the responsibility for the reporting of a VAT transaction from the seller to the buyer of a good or service.

With the purpose of increasing the market competitiveness and compensate the drop which was verified in the first quarter of 2018, from May onwards there will only be documented entries of 5% VAT in the books, but no Tax payment will be requested except for buyers where the 5% of Value Added Tax will still be applied on the tax invoice.

Shamlal Ahmad, Managing Director at International at Malabar Gold & Diamonds declared: “We are hopeful the new direction will help to keep Dubai competitive when it comes to gold prices; [-] the government has taken a positive step to protect the industry which has been built up over such a long period.” The adoption of reverse charge mechanism, will be a relevant contribute to stabilize the gold, diamonds and special metals market in the United Arab Emirates as well as an investment incentive, to encourage foreign companies to invest locally.