Dubai Precious Metals Industry Expects Limited VAT Hit
by Lorys Charalambous, Lowtax.net, Cyprus
19 April, 2017
The introduction of value-added tax in Dubai, including on non-essential luxury goods, became the focus of the sixth annual Dubai Precious Metals Conference, hosted by the low-tax free trade zone the Dubai Multi Commodities Centre.
VAT is being rolled out across Gulf Cooperation Council states from January 2018. The lack of taxes in Dubai has resulted in it becoming a hub for gold trading globally.
DMCC's Executive Chairman, Ahmed Bin Sulayem, said that while the forthcoming VAT would add to "uncertainties we witness on a global level," it is not expected to have a direct impact on DMCC as a free trade zone in terms of trade in gold bars and rough and polished diamonds.
Jeff Rhodes, CEO of Dubai-based Zee Gold, said: "A five percent increase on the value added, meaning the mark-up over and beyond the price of the metal, would be acceptable."
Agreeing with Rhodes, Tony Dobra of London's Baird & Co, added: "Based on other markets' experiences, I would urge the Dubai Government to ensure the rate is kept simple and low. Looking back at what happened in the UK in 1983, the industry was severely impacted upon the introduction of a 15 percent VAT on gold, followed by a 20 percent rise swiftly after."
It was noted that India, the UAE's largest trade partner and the second-largest gold market globally, is expected to roll out a goods and services tax (GST). While experts agree the GST is set to have implications on gold trade to the sub-continent, it should not curb demand for gold or change how it is regarded as a safe-haven commodity.
The DMCC is a free trade zone in the United Arab Emirates offering zero percent personal and corporate tax rates, as well as 100 percent capital repatriation with no currency restrictions.
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