ABU DHABI: Demand for gold jewellery in the United Arab Emirates plummeted in the first quarter, and traders say they know the culprit: the value-added tax.
Wholesale gold jewellery sales in Dubai, sometimes known as the City of Gold, fell 50 to 60 percent in the first quarter from a year earlier after VAT began on Jan. 1, according to Chandu Siroya, vice chairman of the industry association Dubai Gold & Jewellery Group. Dubai’s historic souk marketplace of mostly jewelry traders even has space available for the first time in years, he said.
VAT is “dampening the market,” Siroya said at a gold conference in Dubai Monday. “Sales stalled and it will take time until people understand they will get a refund when they leave. Dubai isn’t a consumer market, it’s a global distribution center.”
