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How can the expenses for purchasing gold be deducted from income?
How can the expenses for purchasing gold be deducted from income?
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The company “AA” LLC, which we have established, operates in the field of manufacturing and selling jewelry products made from precious metals. A portion of the gold we purchase during the month consists of gold items obtained from citizens at our collection points based on a purchase act. However, the law imposes restrictions on the full deduction of expenses incurred from purchasing gold items from individuals from taxable income. How should we formalize the acceptance of gold from the public so that we can deduct the related expenses from our income?
According to the State Tax Service under the Ministry of Economy, starting from January 1, 2025, based on amendments made to Article 109.8 of the Tax Code, precious stones, precious metals, and products made from precious stones and metals have been excluded from the 2% limit on deductible expenses. This limit is normally calculated as 2% of the higher amount between the taxpayer’s annual income and expenses.
Specifically, under Article 109.8 of the Tax Code, with the exception of goods listed in Article 3.5 of the Law “On Cashless Settlements,” including precious stones, precious metals, and items made from them, as well as real estate, vehicles, and movable fixed assets, the deduction limit for other goods purchased from individuals not registered as taxpayers via a purchase act—or purchased from taxpayers based on a control cash register receipt compliant with Article 50.8 of the Tax Code—is restricted to 2% of the higher of the taxpayer’s annual income or expenses. Any amount above this threshold is not deductible from income.
Therefore, as of January 1, 2025, a taxpayer engaged in the manufacturing and sale of jewelry products made from precious metals may fully deduct from income the expenses incurred for purchasing precious stones, precious metals, and products made from them from individuals who are not registered with the tax authorities, provided that the purchase is documented with a purchase act, in accordance with Article 108 of the Tax Code.
The company “AA” LLC, which we have established, operates in the field of manufacturing and selling jewelry products made from precious metals. A portion of the gold we purchase during the month consists of gold items obtained from citizens at our collection points based on a purchase act. However, the law imposes restrictions on the full deduction of expenses incurred from purchasing gold items from individuals from taxable income. How should we formalize the acceptance of gold from the public so that we can deduct the related expenses from our income?
According to the State Tax Service under the Ministry of Economy, starting from January 1, 2025, based on amendments made to Article 109.8 of the Tax Code, precious stones, precious metals, and products made from precious stones and metals have been excluded from the 2% limit on deductible expenses. This limit is normally calculated as 2% of the higher amount between the taxpayer’s annual income and expenses.
Specifically, under Article 109.8 of the Tax Code, with the exception of goods listed in Article 3.5 of the Law “On Cashless Settlements,” including precious stones, precious metals, and items made from them, as well as real estate, vehicles, and movable fixed assets, the deduction limit for other goods purchased from individuals not registered as taxpayers via a purchase act—or purchased from taxpayers based on a control cash register receipt compliant with Article 50.8 of the Tax Code—is restricted to 2% of the higher of the taxpayer’s annual income or expenses. Any amount above this threshold is not deductible from income.
Therefore, as of January 1, 2025, a taxpayer engaged in the manufacturing and sale of jewelry products made from precious metals may fully deduct from income the expenses incurred for purchasing precious stones, precious metals, and products made from them from individuals who are not registered with the tax authorities, provided that the purchase is documented with a purchase act, in accordance with Article 108 of the Tax Code.