Gold jewellery remains a popular purchase in the UAE, but buyers looking at it as an investment need to consider more than the daily gold rate. Making charges, VAT and resale conditions can significantly affect the amount recovered when the jewellery is eventually sold.
The price of gold jewellery typically combines the value of the gold, making charges and applicable VAT. Making charges cover the labour and craftsmanship involved in producing the piece. Jewellers may calculate them as a percentage of the gold value, a per-gram fee or a fixed amount.
Consider a 20-gram, 22K necklace with a gold value of AED 5,785. A 20% making charge adds AED 1,157, taking the subtotal to AED 6,942. With 5% VAT, the final purchase price becomes AED 7,289.10.
This distinction matters because the making charge paid at purchase may not be recovered during resale. A buyer therefore needs to calculate the total cost rather than comparing jewellery prices only by the gold rate.
If the jewellery is later sold when the gold value remains at AED 5,785, the buyer would recover only the gold component in this example. That would leave a shortfall of AED 1,504.10, or about 20.6% of the original purchase price.
Under the same assumptions, the gold value would need to rise by around 26% for the buyer to recover the full initial outlay. The calculation does not account for any additional deduction imposed by the buyer at resale.
Consumer purchases of gold jewellery in the UAE generally attract 5% VAT. Investment-grade gold, such as qualifying high-purity bars and bullion, can receive different VAT treatment. The UAE's reverse-charge mechanism for precious metals mainly applies to qualifying transactions between VAT-registered businesses.
Also Read: Dubai Gold Price Rebounds: 24K Rises to AED 503.75