Egypt Raises VAT and Manufacturing Costs on Gold and Silver Jewelry

The Egyptian Tax Authority has announced an increase in the average manufacturing costs and value-added tax (VAT) on gold and precious metal jewelry for the fiscal year 2024-2025.

This update comes as part of a protocol signed between the Tax Authority and the General Federation of Chambers of Commerce's Gold and Silver Ornaments Trade and Manufacturing Divisions. This protocol sets out the procedural rules for tax collection on platinum, gold, silver, and gemstone jewelry under the VAT law (Law No. 67 of 2016) and its executive regulations issued in 2017.

Manufacturing costs, or "making charges," are crucial for calculating VAT on the sale of gold jewelry. For imported jewelry, the tax base includes the manufacturing cost determined by customs plus applicable customs duties. Under the new agreement, VAT will be calculated at 14% of the average making charges for locally manufactured jewelry. These averages will be reviewed and set annually, effective from July 1st.

For the fiscal year 2024-2025, the protocol specifies the updated manufacturing costs and VAT for various gold carats. For instance, the average making cost for 23.5-carat gold is EGP 79.86 per gram, with a VAT of EGP 11.18 per gram. Similarly, for 21-carat gold, the making cost is EGP 53.24 per gram, with a VAT of EGP 7.45 per gram. These changes reflect the government's effort to streamline tax collection and ensure consistency across the market.

Silver and platinum jewelry are also affected by the new protocol. For example, the average making cost for 925-carat silver is set at EGP 31.31 per gram, with a VAT of EGP 1.86 per gram. Platinum jewelry, particularly pieces set with gemstones, will have a manufacturing cost calculated as double the average cost of 18-carat gold, resulting in a making cost of EGP 159.72 per gram and a VAT of EGP 22.36 per gram.

Jewelry adorned with glass or zirconium stones will have the total weight of the piece included in the calculation of VAT. The tax is based on the agreed-making cost for each metal and carat, applying the same rules to gold coins and bullion.

For imported jewelry, the tax base will include the manufacturing cost determined by customs plus customs duties, with no additional VAT due upon stamping. If jewelry is presented for stamping without customs documentation, the tax will be calculated based on the difference between the declared gold price and the local market sale price of the imported jewelry.

The protocol includes a provision for annual renewal on July 1st of each year. The Gold and Silver Trade and Manufacturing Divisions must submit the average making costs for various carats of gold, platinum, and silver jewelry, as well as gemstones, to the Tax Authority by this date. Once approved, the Tax Authority will notify the divisions, ensuring the protocol's renewal based on these averages.