Dubai
From January 1, for UAE’s gold shoppers, the choice is simple enough. Are they going into a jewellery store with an investment bent of mind — for a gold bar — or should still opt for a necklace set or bangles?
Because these choices matter when it comes to deciding whether their transaction is VAT exempt or not. According to the Ministry of Finance VAT notifications, “certain investment grade precious metals — gold, silver of 99 per cent purity” will come under a zero rating. But everything else merits a 5 per cent additional charge on each transaction. (Even gold coins will bear a VAT cost element.) Market sources say for a cost-conscious shopper adding to his gold holdings each year, VAT will be a factor swaying his decision. Plus there are the jeweller’s making charges that will also be an element to contend with.
Or should the buyer throw such considerations away and focus purely on the design and gold component and settle for paying whatever the VAT on the piece will be? Jewellers will find which way those decisions are headed soon enough.
Local jewellery houses did try and make a case for VAT to be charged on just the value-added part of a jewellery piece and not on the entirety. But the Ministry made it clear soon enough that no such exemptions would be made.
But in the overall scheme of things, gold jewellery will still come in at a much lower price than what the same piece with the same percentage of gold in it would cost in the subcontinent or elsewhere in Asia.
And as for the tourists, an additional 5 per cent is not such a cost burden.
