VAT on gold rolled back

The UAE federal government rolled back the five per cent value added tax (VAT) on the gold and diamond sectors at a wholesale level. Retailers, however, said they will continue to impose five per cent on all jewellery transactions taking place in their shops. Experts said the move by the UAE cabinet could set off a revival in consumer sentiments for gold and diamond jewellery sectors, which had been sluggish in the beginning of the year. Retailers are expected to adjust their costs as a result of the wholesaler exemption, in turn benefitting consumers with lower prices.

Experts said that since the introduction of VAT in January, the jewellery retail sector had been struggling with an exceptionally difficult trading environment. Prior to the rol back, gold sales were down by 30 to 40 per cent from a year ago, with the January decline being in the range of 50 per cent.