The Ministry of Finance (MOF) announced that the tax registrants supplying Gold are not required to impose VAT on the supply of Gold and products which mostly consist of Gold, if the conditions of Cabinet Decision No. 25 are met. In such instances, VAT in respect of the Gold is accounted for under a special reverse charge mechanism which requires the registered recipient to account for VAT on the supply instead of the supplier.
Based on a new decision by the Cabinet, the definition of goods in Cabinet Decision No. 25 has been temporarily amended to state that it may include Making Services directly in connection with the Gold, between 1 June 2018 and 31 December 2022. This change in definition would allow for the application of the reverse charge mechanism on the Making Services that are directly in connection with the supply of Gold, where the conditions as stipulated in Cabinet Decision No. 25 of 2018 are met for that specific period only.
However, from 1 January 2023, the application of the reverse charge mechanism will be restricted to the supply of Gold and any products where the principal component consists of Gold.
Hence, if the supplier charges separate considerations for the Gold and the Making Services, or reflects the price of these components separately, from 1 January 2023, the supplier is required to impose VAT on the service component.
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