Relief for Indian exporters as Dubai mulls VAT breather for B2B gold sales
On January 1, Dubai and UAE authorities levied a 5% VAT on gold and other jewellery
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In what could be a major relief for Indian gem and jewellery exporters, the Dubai government is mulling to give them an exemption from the recently implemented value-added tax (VAT).
On January 1, the Dubai and United Arab Emirates (UAE) authorities levied a 5 per cent VAT on gold and other jewellery. This affected Indian exporters as they used to route their consignments to European and African countries through the UAE and Dubai till last year.
After the levy, gold price in Dubai came close to the prices in India. So, exporters targeting markets abroad, including non-resident Indians, were finding it pricey to go through Dubai.
The authorities, however, are now considering removing the VAT on business-to-business (B2B) and business-to-consumer (B2C) sales, as well as on gold. The levy will, however, remain on jewellery-making charges.
In a letter to its members, the Dubai Gold and Jewellery Group (DGJG), the largest jewellers’ body in the city, said: “We have been informed by Ahmed Bin Sulayem, executive chairman, Dubai Multi Commodity Centre, that our sector may receive special considerations for the VAT in a few months.”
“B2B customers will be charged 5 per cent on full value through the reverse-charge mechanism,” the letter continued. “This means there is no need for an actual payment. VAT would be applicable only on paper. For B2C, or retail customers, however, 5 per cent VAT will be... on making charges/value-additions and not on the gold value.”
On January 1, the Dubai and United Arab Emirates (UAE) authorities levied a 5 per cent VAT on gold and other jewellery. This affected Indian exporters as they used to route their consignments to European and African countries through the UAE and Dubai till last year.
After the levy, gold price in Dubai came close to the prices in India. So, exporters targeting markets abroad, including non-resident Indians, were finding it pricey to go through Dubai.
The authorities, however, are now considering removing the VAT on business-to-business (B2B) and business-to-consumer (B2C) sales, as well as on gold. The levy will, however, remain on jewellery-making charges.
In a letter to its members, the Dubai Gold and Jewellery Group (DGJG), the largest jewellers’ body in the city, said: “We have been informed by Ahmed Bin Sulayem, executive chairman, Dubai Multi Commodity Centre, that our sector may receive special considerations for the VAT in a few months.”
“B2B customers will be charged 5 per cent on full value through the reverse-charge mechanism,” the letter continued. “This means there is no need for an actual payment. VAT would be applicable only on paper. For B2C, or retail customers, however, 5 per cent VAT will be... on making charges/value-additions and not on the gold value.”