Dubai: Putting off your diamond jewellery purchase because of value-added tax (VAT)? Don’t, as more of UAE’s jewellers are willing to absorb the VAT component on diamonds.
Jewellery retailers are doing everything in their power to ensure that the sparkle does not go off on their sales numbers. The sentiment is that shoppers will quickly adjust to VAT on gold and gold jewellery but be less willing to adapt to shell out tax on high-cost diamond purchases.
Sky Jewellery confirmed that it is running a promotion whereby it will absorb the 5 per cent VAT on all diamond jewellery purchases. Plus, it has deemed its Gold Souq store as “VAT-free”, where shoppers do not need pay the VAT component. They can also obtain invoice with VAT-paid details. “The showroom is effectively trimming its profit margin by accommodating VAT on behalf of customers,” said Cyriac Varghese, General Manager at Sky. “The company is complying with FTA (Federal Tax Authority) regulations by accommodating VAT from the profits.”
Pure Gold Jewellers has also exempted shoppers from any VAT charges on both diamond and gold jewellery purchases all through January.
According to market sources, diamond jewellery purchases tend to be more of “emotion-led” than based on thoughts about it being a future value creator akin to gold. In the last four years, jewellers had made efforts to create a wider user base for diamond jewellery and without them having to pay out tens of thousands of dirhams for it. Sub-Dh5,000 purchases had been on the increase, but with VAT chances are that shoppers will shift such purchases back into gold.
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