Dubai: The UAE jewellery retailers will not rush to revise prices after changes in the way import duties are calculated on imported pieces, highly placed industry sources confirm.
The UAE has a duty tariff of 5 per cent on jewellery imported by wholesalers, but individual emirates such as Dubai and Sharjah have historically offered rebates as part of their efforts to ensure the country’s standing as the region's gold and jewellery trading hub.
Now, the sources say, the rebates are being wound down and import duty will be on par with those in most of the other Gulf states. (On bullion imports, there has historically been no import duty.)
The question, then, is whether the rollback of rebates will force retailers to pass on their higher cost of acquiring jewellery to their consumers.
Gulf News spoke to multiple retailers, who said they will try and absorb as much of this as possible.
Nothing drastic, they said, will be considered in terms of showroom prices — and especially during a time when the jewellery trade is part of an ambitious Dubai Shopping Festival campaign, when 34 kilos of gold are being raffled.
On Wednesday, 22k gold was quoted at Dh130.5 as per the Dubai Gold Rate.
“The gold industry in the UAE already works on the lowest margins available anywhere in the world - this has been our history and will remain so,” said a jewellery wholesaler. “It’s as low as 2 per cent on manufactured jewellery.
“Across the Gulf states, there are changes being made on tax structures, and that will naturally extend to subsidies as well. Despite the changes, the UAE’s jewellery trade will continue to offer the most competitive showroom prices.”
In a statement, Tawhid Abdullah, Chairman Dubai Gold & Jewellery Group, said: “As a trade body, DGJG welcomes all positive initiatives by the Dubai Government to streamline its economic policies with the federal as well as the GCC authorities. We are certainly hopeful that Dubai will remain at the forefront of the jewellery business by offering the world’s best designs at the most affordable prices both at the wholesale and retail level.
“Jewellers will be working harder to preserve Dubai’s status as the ‘“Cty of Gold” by streamlining their businesses with any polices introduced by the government.”
The import duty move, according to sources, could also be a precursor to the introduction of a value-added tax (VAT) regime from next year.
But the move could provide a major boost to jewellery design and manufacturing in the UAE. Some of the bigger retail chains already operate such facilities, which then allows them to be free of the 5 per cent import duty. The ‘Made in UAE’ stamp also allows them duty benefits when shipping to other Gulf countries.
“Whenever a set of countries create a common market, as the Gulf states are doing, there will be immense benefits from localized manufacturing,” said a jeweller. “Jewellery manufacturing in the UAE has every chance of getting bigger.”
The jewellery business in the UAE/Gulf had gone through a difficult year, as domestic shoppers reduced purchases of their favourite metal because of the soft economy and uncertain job market.
Traders are hopeful that if the volatility of gold prices reduce, shoppers could be induced to return. They are already seeing some silver lining in the form of higher tourist led spending in recent weeks after they stayed away through the better part of 2015 and 2016.