Gold will shine bright again: No more VAT on jewelry
In January 2018, the UAE government implemented the Value Added Tax (VAT) at a standard rate of 5%.
The VAT was imposed on most goods and services to boost revenue, with some limited exceptions including basic food items, healthcare, and education.
Since then, gold traders have been wondering what the VAT can do to the business of prized jewelry.
The gold, diamond and precious metals sector is one of the most important sectors in the UAE’s economy and it is expected to witness significant growth in the coming period as part of the UAE’s diversification objectives.
Recently, the UAE has rolled back the 5% (VAT) on gold and diamond sectors.
Retailers will continue to impose 5% on all jewelry transactions taking place at their shops, and the UAE only rolled back the VAT on the wholesale level, the Cabinet announced, according to the state news agency WAM.
The Cabinet explained that this step aimed to improve the ease of doing business in the UAE, WAM said.
It explained that this new law would help stabilize the gold and jewelry sector, as well as lure investments into the jewelry business.
How are the jewelers feeling?
Local jewelers welcomed the move, hoping that the VAT roll back can extend to the retail business, which will benefit the jewelry retailers as well as tourists and consumers, Forbes Middle East reported.
“One of the major tourist attractions of the U.A.E. is the jewelry sector that generates billions of dollars in revenue every year and by exempting tax, the benefits to the business and the overall economy are immense,” Firoz Merchant, Philanthropist and Founder and Chairman of Pure Gold Group, said to Forbes Middle East.
Forbes added that Dubai’s gold sector was a popular spot for visitors flocking to the country, but the VAT introduction caused a decline in demand.