Egyptian Tax Authority Clarifies Gold Making Charges Controversy; July Changes Affect VAT Only

The Egyptian Tax Authority has settled the recent controversy surrounding reports of a new increase in gold manufacturing charges (making charges) scheduled to take effect in July, stressing that the upcoming adjustments relate only to the accounting averages used for calculating Value Added Tax (VAT) and do not represent a new increase in the actual manufacturing charges applied in the market.

The Authority’s statement confirms what market observers had previously explained regarding the recent Customs and Tax Authority circular, which concerns the annual update of accounting manufacturing-charge averages used for VAT assessment rather than imposing new charges on gold jewelry sold to consumers.

Rasha Abdel Aal, Head of the Egyptian Tax Authority, denied reports circulating on websites and social media claiming that the Authority had increased gold manufacturing charges in the local market. She clarified that the circular issued by the Authority is a routine annual document that specifies the average manufacturing charges used solely for tax accounting purposes.

She added that these averages are determined under the cooperation protocol signed between the Egyptian Tax Authority and the Gold and Silver Traders and Manufacturers Divisions, which regulates the collection of VAT on gold jewelry at the hallmarking stage.

According to Abdel Aal, the annual 10% increase stipulated in the protocol applies only to the accounting averages used for tax calculations and does not constitute an increase in the actual manufacturing charges paid by consumers when purchasing gold jewelry.

Under the updated framework, the accounting manufacturing-charge average for 21-karat gold will increase from EGP 59 per gram to approximately EGP 64.41 per gram, raising the VAT amount from about EGP 8.20 to nearly EGP 9 per gram. For 18-karat gold, the accounting average will increase from EGP 88 to approximately EGP 96.64 per gram, raising the VAT amount from roughly EGP 12.30 to about EGP 13.50 per gram.

Market analysts noted that the confusion stemmed from a failure to distinguish between actual manufacturing charges determined by manufacturers and retailers and the accounting averages used exclusively for VAT calculations.

They emphasized that actual manufacturing charges are determined by gold producers, workshops, and retailers according to production costs and product specifications and are not subject to any unified pricing imposed by tax or government authorities.

The concept of a fixed or unified manufacturing charge across the gold market is inaccurate because numerous factors influence pricing. These include gold purity, product type, design complexity, manufacturing technology, brand value, production losses and wastage, retail location, labor expenses, energy costs, and overall operating expenditures.

As a result, manufacturing charges vary significantly from one product to another and from one company to another. They may even differ within the same company, depending on the craftsmanship and production requirements of each item. Consequently, the accounting averages outlined in the tax protocol serve only as reference values for VAT calculations and do not reflect actual market manufacturing charges.

The clarification comes after some gold companies implemented commercial increases in manufacturing charges beginning in June, raising charges by approximately EGP 30 per gram for 21-karat jewelry and EGP 60 per gram for 18-karat jewelry due to higher production costs and rising input expenses. These commercial adjustments are independent of the Tax Authority’s annual accounting update.

Market experts stressed that any future increase or decrease in actual manufacturing charges remains a commercial decision made by producers and retailers based on market conditions and production costs and is not directly linked to the routine tax-accounting adjustments implemented by the Egyptian Tax Authority.

The Authority’s statement, therefore, confirms that the measures scheduled to take effect in July 2026 concern only the mechanism for calculating VAT on manufacturing charges and do not involve the imposition of any new increase in the actual manufacturing charges applied to gold jewelry in the Egyptian market.