VAT aspect of Gold Trading

Ideatax, Jakarta -- Recently, the Government issued a provision regulating the imposition of Value Added Tax (hereinafter referred to as VAT) on gold trading. Through Minister of Finance Regulation No. 48 Year 2023 on Income Tax and/or Value Added Tax on Sales/Delivery of Gold Jewelry, Gold Bars, Jewelry Entirely Not of Gold, Gemstones, and/or Other Similar Stones, as well as Services Related to Gold Jewelry, Gold Bars, Jewelry Entirely Not of Gold, and/or Gemstones and/or Other Similar Stones, Performed by Gold Jewelry Producers, Gold Jewelry Traders, and/or Gold Bar Entrepreneurs, the Government regulates the aspects of Income Tax and Value Added Tax on gold trading, both gold jewelry and gold bars.

 

Technical Regulations of Higher Regulations

For information, Minister of Finance Regulation Number 48 of 2023 is a technical regulation and follow-up to Article 44e Paragraph (2) Letter f of the KUP Law which states that further provisions regarding the appointment, withholding, collection, deposit, and / or reporting of taxes that have been withheld or collected by other parties are regulated by or based on a Minister of Finance Regulation.
In addition, this provision is also a technical rule and a follow-up to Article 16G letter I of the VAT Law which stipulates that further provisions regarding the amount of certain business turnover, certain types of business activities, certain types of Taxable Goods, certain types of Taxable Services, and the amount of Value Added Tax collected and deposited as referred to in Article 9A paragraph (1) shall be regulated in a Minister of Finance Regulation.
 

Substitution of Prior Provision

Basically, prior to 2022 there were provisions regulating the imposition of VAT on the delivery of gold. This is regulated in the Minister of Finance Regulation Number 30/PMK/03/2014 concerning Value Added Tax on Delivery of Taxable Goods in the form of Gold Jewelry.
The provision regulates, among others, that the sale of Gold Jewelry and/or delivery services related to Gold Jewelry by Taxable Entrepreneurs are subject to VAT. In addition, this provision also stipulates that on the sale of Excisable Goods in the form of gold jewelry and/or delivery services related to gold jewelry by an Excisable Entrepreneur in the form of gold jewelry is subject to VAT at 10% (ten percent) multiplied by another value used as the Tax Imposition Base.
The other value used as the tax imposition base in this provision is 20% (twenty percent) of the selling price of Gold Jewelry or replacement value. Thus, the effective rate of VAT on the sale of gold jewelry before 2022 is 2% of the selling price.
 

Current Provision

The provisions stipulated in Minister of Finance Regulation Number 30 of 2014 as mentioned above are no longer in accordance with the development of the business world and Law Number 7 of 2021 concerning Harmonization of Tax Regulations, so through Minister of Finance Regulation Number 48 of 2023, the Government regulates the following matters:

1. VAT is levied both on the sale of gold jewelry and services related to gold jewelry, gold bars, and other jewelry;

2. Gold-related services include modification services, repair services, plating services, gilding services, cleaning services, and other services.

3. Gold factories that deliver gold jewelry to other gold factories or gold jewelry traders are subject to VAT with a tax base of 10%. So, the effective rate of delivery of gold jewelry from a gold factory to another gold factory or gold trader is 1.1%.

4. Gold producers who sell gold jewelry to end consumers are subject to VAT on the tax base of other value at 15% of the selling price. Thus, the effective VAT rate on the delivery of gold jewelry from the producer to the final consumer is 1.65%.

5. Gold jewelers who sell gold jewelry to gold jewelry traders or end consumers are subject to VAT with a tax base of 10% of the selling price. Thus, the VAT rate applicable to the sale of gold jewelry from gold traders is 1.1% of the selling price.

6. In the event that the gold trader does not have a complete tax invoice for the purchase of gold jewelry, the tax base on the sale of gold jewelry by the gold trader is 15%. Thus, the effective rate for the sale of gold jewelry without a complete tax invoice is 1.65% of the selling price.

7. If a gold trader sells gold jewelry to a gold factory, the VAT payable is 0%.

8. For the delivery of services related to gold jewelry, gold bars and other jewelry, VAT is imposed with a tax base of 10%. Thus, the VAT rate applicable to the delivery of services related to gold jewelry, gold bars and other jewelry is 1.1%.

 

This is an explanation of the latest provisions regarding the imposition of VAT on the sale of gold jewelry, gold bars and gold-related services. In case the merchant needs further explanation, please contact Ideatax.

 

Related Regulations
- Law Number 6 of 1983 on General Provisions and Tax Procedures as amended by Law Number 7 of 2021 on Harmonization of Tax Regulations.
- Law Number 8 of 1983 on Value Added Tax and Sales Tax on Luxury Goods as amended by Law Number 7 of 2021 on Harmonization of Tax Regulations.
- Minister of Finance Regulation Number 30/PMK/03/2014 on Value Added Tax on Delivery of Gold Jewelry.
- Minister of Finance Regulation Number 48 Year 2023 on Income Tax and/or Value Added Tax on the Sale/Delivery of Gold Jewelry, Gold Bars, Jewelry whose materials are not made of gold, gemstones and/or other similar stones, as well as services related to gold jewelry, gold bars, jewelry whose materials are not made of gold, and/or gemstones and/or other similar stones, which are carried out by gold jewelry manufacturing entrepreneurs, gold jewelry trading entrepreneurs, and/or gold bullion entrepreneurs.