Silver Price in UAE Dirhams (AED)

Yes, physical silver purchases in the UAE are subject to 5% Value Added Tax (VAT), which was introduced in January 2018. This applies to silver bars, coins, and jewelry. Unlike investment gold (99%+ purity), which was granted a VAT exemption, silver does not receive any such relief regardless of its purity. The 5% VAT adds to the acquisition cost and means the silver price must appreciate by at least 5% before an investor breaks even on a purchase.

The UAE dirham has been pegged to the US dollar at a fixed rate of AED 3.6725 per USD since 1997. This means the AED silver price moves in almost exact proportion to the international USD spot price, with no currency fluctuation risk. To convert the USD silver price to AED, simply multiply by 3.6725. For example, if silver is US$30 per ounce, the AED price is approximately AED 110.18 per ounce. This peg eliminates the currency risk that silver investors in other countries (such as those holding silver in EUR, GBP, or INR) must contend with.

Dubai offers numerous options for purchasing silver. The famous Dubai Gold Souk in Deira has many retailers selling silver bars, coins, and jewelry alongside gold. Established dealers such as Emirates Gold, Al Etihad Gold, and various authorized bullion dealers offer investment-grade silver products. The Dubai Gold and Commodities Exchange (DGCX) provides silver futures contracts for traders. Online platforms and bank precious metals services are also available. When buying from the Souk, it is advisable to check the daily spot price and negotiate premiums carefully.

Silver investment in the UAE has both advantages and drawbacks. The major advantage is the absence of income tax and capital gains tax, meaning all profits from silver appreciation are retained by the investor. The AED/USD peg eliminates currency risk, providing price transparency. However, the 5% VAT on physical silver is a disadvantage compared to gold, which is VAT-exempt. This means silver must appreciate by more than 5% to break even. For those seeking to avoid the VAT cost, silver ETFs or DGCX futures offer alternative exposure without the physical acquisition tax.