GOLD Item Making Charges VAT Treatment
VAT registrants who supply gold are exempt from having to charge VAT on the supply of gold or gold-related products if the requirements of a particular reverse charge mechanism are satisfied. The registered receiver uses the unique reverse charge to account for VAT related to the gold.
On the other hand, the supplier must charge VAT on the service component if they charge different rates for the gold and associated making service, or if they reflect the prices of these components separately.
Special reverse charge mechanism
If every one of the following requirements is satisfied, a registered seller of gold items is not allowed to charge VAT on the supply:
- The customer is registered for VAT;
- The supplier gets a signed statement from the recipient attesting to all of the following:
- The Gold Items will be resold by the receiver or used to create or manufacture further Gold Items.
- On the date of supply, the recipient has a valid VAT registration.
- The recipient is responsible for reporting the VAT on the gold items that were given to him.
The recipient is in responsibility of applying the special reverse charge to the supply and is liable for any associated taxes if all the aforementioned requirements are satisfied.
| Single composite supply | Multiple Supplies |
|---|---|
The supply will be viewed as a single composite supply of gold items if the supplier sets a single price for the gold item that includes the manufacturing charge. |
Supplier bills separately for the making service and gold items, or where these components’ prices are different. |
Gold items would be supplied as a single composite supply (including the making service), which might be eligible for reverse charging. |
Gold items and the making service are charged for individually by the provider, or in cases where the prices of these components are listed separately, the supplier will handle each component as a separate supply and apply the appropriate VAT treatment to each distinct component. |
Both the supplier and the recipient must keep adequate documentation, such as a legitimate tax invoice from the supplier attesting to the application of the reverse charge mechanism and demonstrating a single consideration for the Gold Item (including the making service). |
Under the unique reverse charge system, only the VAT associated with Gold Items may be accounted for; in the process of making charges, it will be handled independently. |
If a supplier provides connected making services and applied the improper VAT treatment, the supplier is required to make a voluntary disclosure to amend the inaccurate treatment.
Disclaimer: Above all information is for general reference only and sourced from internet, before making any kind of decision please visit the authorized websites of authorities and service providers.