Gold and Jewellery Accounting in Iran: When Stock Is Measured in Grams

This is written for jewellery retailers, workshop owners and the accountants who keep their books. Gold is the one product whose rial price changes every day while its weight stays fixed, and that single fact reshapes the whole logic of accounting in this trade. In the gold-market files I have handled, most disputes trace back to the absence of a reliable weight reconciliation.

Why gold is not like any other retail trade

In ordinary retail, the rial value of stock is a workable control measure. In a jewellery shop it is meaningless: if the gold price rises ten percent, your stock value rises ten percent without a single gram being added. So control has to run on weight while reporting runs on rials, and the two must operate side by side.

The second difference is that most of the product's value is raw material value. Your real margin sits in the making charge and the selling margin, not in gold price movement. A jeweller who counts price appreciation as profit is confusing the outcome of a speculative position with the outcome of trading.

The weight reconciliation

The single most useful report in this trade is the weight reconciliation:

Opening weight + purchased weight − sold weight − loss = closing weight

It has to close by fineness. If it closes every month, no hidden shortage survives in the shop. If it does not close, no amount of polished rial reporting compensates.

To add items of different fineness together, convert to one basis. The common domestic basis is 750 fineness (18 carat):

Equivalent 750 weight = actual weight × item fineness ÷ 750

Define the trade's other units in the system as well: a mesghal of gold is 4.608 grams, and the market mazaneh quote refers to the price of one mesghal of melted gold. Stone weights are expressed in carats (0.2 gram each) and must be separated from the gold weight, or both the weight reconciliation and the pricing go wrong.

Price components of a finished article

This is not merely an accounting split; it is the direct basis of your tax calculation.

VAT on gold articles

The defining tax feature of this sector is that under the permanent VAT law the tax base for articles of gold, jewellery and platinum is limited to the making charge, commission and seller's margin, with the value of the gold itself excluded. The practical consequence is simple: your invoice must present the price components separately, otherwise correct calculation becomes impossible.

Bullion, coins and melted gold are subject to separate arrangements that have changed in recent years with the move to centralised trading; confirm the current position from the latest tax administration circular. General mechanics of input credit and quarterly returns are in the VAT article.

Consigned gold and dealings between traders

A large share of market turnover is weight moving between traders: gold on consignment for sale, borrowed gold used for settlement, and items sent to a workshop for manufacture or repair. Three rules:

• Consigned gold is not your property; keep it out of inventory and in memorandum or consignment accounts.
• Every movement needs a signed receipt stating weight, fineness, piece count and date.
• Settlements made in grams rather than rials must be recorded in the weight ledger and translated to rials at period end so the financial statements are complete.

When sending metal to a workshop, agree and document the manufacturing loss as a percentage in advance, and return recovered sweeps and filings to stock. Undocumented loss is simply a stock shortage under another name.

Buying back from customers

Second-hand gold bought from a final consumer normally comes without a formal invoice and creates no input credit. Design an internal purchase form covering at minimum the seller's identity and national ID, weight, tested fineness, amount paid and date. These forms both support the weight entry and explain the origin of your cash outflows if the file is examined.

E-invoicing and stocktaking

Mandatory electronic invoicing applies here too, and the special tax base makes invoice accuracy more important than usual:

1. Map items to standard product identifiers, with separate items per fineness and article type.
2. Split gold value, making charge and margin into their respective invoice fields.
3. Handle returns and exchanges with corrective or cancelling invoices, not by deleting internal records.
4. Reconcile card terminal traffic to software sales daily.
5. Confirm at day's end that every invoice was accepted by the portal.
6. Close the daily weight report separately and tie it to the sales report.

Registration mechanics are in the taxpayer system guide. Stocktaking differs from other trades in one respect: count both by piece and by weight, with the scale checked in front of two people, and list consigned items, items at the workshop and items under repair on separate records so they never merge with owned stock. General counting procedure is in the year-end stocktake article.

Monthly numbers worth watching

• Average making charge earned per gram sold
• Weight turnover — how long a gram takes to sell
• Share of slow-moving items in total stock weight
• Manufacturing loss by workshop
• Operating profit excluding gold price movement — the profit that actually came from trading

Key takeaways

• Control on weight, report on rials; you need both ledgers.
• A weight reconciliation by fineness is the sharpest shortage detector in this trade.
• The VAT base for gold articles covers only making charge, commission and seller's margin.
• Invoices must separate price components; a single-line total creates tax risk.
• Consigned gold and items at the workshop must never merge with owned inventory.