The UAE government seeks to ensure the effective introduction of VAT, taking into account the best international standards. In order to maintain the competitiveness of the local precious metals market, the Cabinet of Ministers adopted a law on the mechanism for reverse charging VAT for those who invest in gold, diamonds and precious metals. This step is aimed at maintaining the UAE’s high positions in the ratings on the “ease of doing business” option.
The innovation will simplify the conduct of business for investing in gold, diamonds and precious metals. The mechanism of reverse VAT charging will help stabilize the gold and diamond industries in the UAE, as well as attract investment in this sector. The law covers investments in such precious metals as gold, silver and platinum, which are used in trade and in accordance with internationally recognized standards have a purity level of 99% or higher.
The decision on this innovation was adopted along with a number of other initiatives that would be attractive to investors. The government also seeks to provide the optimal environment, infrastructure and regulatory framework necessary to grow and maintain the UAE’s position as a global shopping center. The volume of gold trade in the UAE increased to 244.3 billion dirhams in 2016, while the growth rate was 13%. In the same year, gold imports to the UAE were estimated at 142.3 billion dirhams, exports – 75.9 billion dirhams, and re-exports – 26 billion dirhams.
The sector of gold, diamonds and precious metals is one of the most important sectors for the development of the national economy and its diversification, and it is expected that, taking into account all government efforts, it should increase significantly in the short term.