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In Saudi Arabia, there is a 15% value-added tax (VAT) on the sale of goods and services, except for a few, and gold is one of them. We have explained the tax treatment on gold below.
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Gold with > 99% purity level
The purchase and sale of gold with a 99% purity level is considered a zero-rated tax supply in Saudi Arabia, which means that there is no value-added tax on it.
It means that if you buy gold bars for investment purposes, you will buy them at the market price and similarly sell them at the market price without any VAT or tax involved.
This is why commercial banks that deal with the buying and selling of gold in Saudi Arabia do not charge any VAT on their trading.
Gold with < 99% purity level
The purchase and sale of gold with less than 99% purity level attract the standard rate of value-added tax i.e., 15% in Saudi Arabia.
Buying Gold Jewelry
In other words, if you buy gold jewelry, you must pay 15% VAT on the price of gold+service in Saudi Arabia. For example, while buying a gold ring,
- Value of Gold: SR 900.
- Service Charges: SR 100.
- Price of the ring w/o VAT: 1,000.
- Value Added Tax: SR 1,000 X 15% = SR 150.
- Total Payment: SR 1,150.
Selling Gold Jewelry
However, when selling the gold jewelry, you will not be able to collect VAT from the shopkeeper as you are not a VAT-registered person. For example, if you want to sell the same ring back to the shopkeeper, he will buy it at this price;
- Value of Gold: SR 900.
- Service Charges: Nill.
- Price of the ring w/o VAT: 900.
- Value Added Tax: Nill
- Total Payment: SR 900.
- Check Gold Price before you sell it.
Conclusion
In conclusion, if you want to buy gold for investment purposes, only deal in gold bars with a 99% purity level, as there is no value-added tax on its trading in Saudi Arabia.
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