Demand for gold jewelry in the United Arab Emirates fell in the first quarter, retailers see the reason for the introduction of VAT.
According to Chandu Siroi, vice chairman of the industry association Dubai Gold & Jewelery Group, wholesales of gold jewelry in Dubai, the City of Gold, as it is called, fell 50-60% in the first quarter from the previous year after the introduction of VAT from January 1, 2018. The businessman said that even in the famous market in Dubai, where they trade in jewelry, vacant spots have appeared over the years.
According to the World Golden Council, demand for gold in the UAE has not recovered after the global financial crisis of 2008 and in 2017 fell to its lowest level in 20 years.
In a country dominated by expats, most of the jewelry is sold to foreign jewelers, and with the introduction of tax this year, such an offer has become overwhelming for many.
At a conference on the gold market in Dubai on Monday, Mr. Shiroya noted that VAT “dampens” the market. "Sales plummeted amid the introduction of VAT. Dubai is not a consumer market, it is a global distribution center."
The new tax break process is not effective, now a simple retailer’s trip from India to get goods to Dubai has turned into a real bureaucratic nightmare. According to Syroi, industry players are trying to influence government decisions to somehow revive the market.
