Dubai: The UAE’s jewellery trade has not lost hope that some changes can still be made on how value-added tax (VAT) is calculated on gold purchases.
“We have been receiving some favourable responses from senior government sources in Dubai,” said Abdul Salam K.P. of Malabar Gold and board member of Dubai’s Gold & Jewellery Group.
“The best option would be to have VAT only on the value-added portion of gold jewellery and not on the entire piece, which is the case now.”
A typical gold jewellery carries a value-added portion of 7-10 per cent, while for diamond pieces, that would be 12-15 per cent. So, for example, if someone buys a 10 gram gold bangle, she would not need to pay VAT on the weight of the gold. (Gold bars are exempt from VAT.)
“The thinking behind this is that pure gold is already zero rated,” said Abdul Salam. “We are hopeful that at the next Executive Council meeting, the gold trade [sector’s] concerns would be looked into.
“Another option that was being talked about in the trade was of gold to be treated as a commodity and be fully exempt from VAT. But that would be too much of a stretch in the current environment.”