Fashion

UAE to impose VAT, Indian gold jewellery exports may suffer

In the first eight months of this financial year, gold exports dropped to 14733.83 crore rupees (approximately $2.2 billion), marking a six percent decrease from the year before. New regulations following the Goods and Services Tax (GST) implementation in July received many complaints from those in the gold jewellery industry and this year has not been their best. A new round of difficulties could be coming with one of India’s biggest gold jewellery importers, the UAE, will be rolling out five percent Value Added Tax (VAT) in the New Year.“Exports to the UAE have already dwindled after the government imposed five percent customs duty on gold from the beginning of the year,” said Praveen Shankar Pandya, the Chairman of the Gem & Jewellery Export Promotion Council (India).

“Now the UAE government will be introducing five percent VAT which will further affect sales. More than half of plain gold jewellery manufactured in India is exported to the UAE,” Pandya explained.The introduction of VAT on gold jewellery comes during the Dubai Shopping Festival which is currently running from December 26 to January 27 and has drawn many international jewellery customers and buyers.There is some confusion over what will fall under the new VAT charge. Although it is certain that this will affect gold jewellery, Pandya has said that it is unclear whether VAT will be charged on gold jewellery that will be re-exported from Dubai to other parts of the world or not.A large amount of Indian jewellery is routed through Dubai to other global markets and so whether this will be taxed or not is a pressing concern. “We are waiting for more clarity from Dubai this week,” said Pandya who also stated that, although gold bars will not be taxed, whether or not coins will be is also unclear at present. 

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