Zero-rating of investment gold, silver and platinum under Article 36

Article 35 of the Common VAT Agreement provides for the zero-rating of investment gold, silver and platinum. Under Article 35(1) of the Agreement, gold, silver or platinum is considered an investment when the metal is at a purity level not less than 99% and tradable on the Global Bullion Exchange. Article 35(2) subjects the supply of investment gold, silver and platinum to the zero rate, and Article 35(3) subjects the first supply after extraction of gold, silver and platinum to the zero rate.

Article 10 of the VAT Law provides that the Regulations shall determine the zero-rated Supplies and their terms and conditions. In the Kingdom, the operative rules are in Article 36 of the Implementing Regulations, headed "Supplies of Investment Metals".

The two zero-rated supplies

Article 36 of the Regulations zero-rates two types of supply:

• The first supply by the producer or refiner. Article 36(1) provides that the first Supply of a Qualifying Metal by its Producer or Refiner is zero-rated.
• Rights over investment metal. Article 36(2) provides that any grant, assignment or surrender of a right, interest or claim with respect to any Supply of a Qualifying Metal for investment is zero-rated if such right, interest or claim is considered a transfer or to grant a right to the possession of the Goods.

The second limb is relevant to arrangements in which the investor acquires a right or claim over metal rather than taking physical delivery. The condition is that the right, interest or claim is considered a transfer of, or a grant of a right to the possession of, the Goods.

The defined terms

Article 36(3) defines the expressions used in the Article:

• a Qualifying Metal is gold, silver or platinum;
• a Qualifying Metal is considered to be supplied for investment when the metal is at a purity level of not less than ninety-nine percent (99%) and tradeable on the global bullion market;
• Producer means any person who carries on the mining and extraction of a Qualifying Metal; and
• Refiner means any person who carries on the refining by any process of a commodity into a Qualifying Metal.

Both tests in the investment definition must be met. Metal of the required purity that is not tradeable on the global bullion market is not supplied for investment, and neither is tradeable metal of lower purity.

Practical observations

Article 36(1) is framed by reference to the person making the supply: it covers the first Supply by the Producer or Refiner. Article 36(2) is framed by reference to rights, interests or claims over a Supply of a Qualifying Metal for investment. Dealers, banks and platforms in the precious metals trade should therefore identify, transaction by transaction, which limb of Article 36 is relied on, and retain evidence of the purity of the metal and its tradeability on the global bullion market.

Supplies of gold, silver or platinum that do not meet these conditions, including metal below the purity threshold, are not covered by Article 36 and must be considered under the general rules.

As with other supplies listed in Chapter Six, Article 31(2) of the Regulations provides that a Supply which is both an Exempt Supply under Chapter Five and a zero-rated Supply under Chapter Six is treated as a zero-rated Supply.

Instruments relied on: VAT Law, Article 10; Common VAT Agreement, Article 35; Implementing Regulations, ninth edition, 26/11/1444H corresponding to 15/6/2023G, unofficial English translation, Articles 31 and 36 (neither was amended by ZATCA Board Resolution No. (01-06-24) dated 17/05/1446H, published in the Official Gazette, Umm Al-Qura issue 5082, on 18 April 2025). The Arabic text prevails.

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