Abu Dhabi: A cross-section of expatriates in the UAE who spoke to Gulf News on Wednesday welcomed the UAE Government’s decision to roll back the 5 per cent Value Added Tax (VAT) on the gold and diamond sectors at the wholesale level.
Najeeb Kayyalakkakath, 43, from India, said that if retailers pass on the VAT benefit they receive from wholesalers to customers, it would encourage regular buyers like him to continue buying gold from Dubai. He said that in the 22 years he has been residing in Sharjah, he has been a regular gold buyer before heading home for his annual vacation besides on other occasions. “I bought gold from India only twice, second purchase was last week.”
Kayyalakkakath recalled asking his wife back in India to make the purchase last week after deciding he wanted to buy an ornament for his six-year-old daughter. “I felt prices are higher here due to newly introduced tax. I had purchased 52 grams of ornaments in last November when I went home on vacation,” Kayyalakkakath said.
Expatriates would not find it attractive to pay tax on gold in the UAE and pay customs duty at the airport back home, Kumar reasoned.
He said three of his roommates also had the same impression and they, too, had not bought any gold since VAT was introduced on January 1. “However, the new development may change the situation,” he said.
Smitha G Menon, 39, an Indian homemaker, hopes that retailers will rise to the occasion and extend the gains to their customers, taking advantage of the benefit they receive from wholesalers.
She has been regularly buying gold before going home on annual vacations and on occasions like birthdays of family members. “I never bought gold from India after coming to Dubai 17 years ago.” Apart from quality of gold, lower prices in Dubai compared to India has always been a big attraction. “Tax is definitely a discouraging factor. I hope this will change,” she said.
Sanjaya Kumar, a 45-year old Nepalese resident in Abu Dhabi, welcomed the government’s move to exempt gold and diamond wholesalers from value added tax.
“I hope that retailers would waive off the five per cent tax with the new development,” said Kumar an HSE [Health, Safety and Environment] professional.
“It is a good move but it should benefit the customers,” Kumar said.
He said he used to buy a good quantity of gold when he would head home on holiday. However, he has not been in a position to do so for a while due to financial constraints. The higher cost of living has meant that much less for investments, Kumar said, adding that the Nepalese government, too, has imposed customs duty on gold.
“With VAT, if the price in the UAE is higher than that of our country, why should we buy it from here,” he asked.
He said expatriates would not find it attractive to pay tax on gold in the UAE and pay customs duty at the airport back home. If the new development helps to keep gold prices lower in the UAE, it will definitely attract more customers, he said.