DUBAI (Scrap Register): Higher taxes appear to be a growing issue for gold-jewelry wholesalers in the United Arab Emirates, although other issues are also at play, said Metals Focus.
The consultancy cited two tax changes in recent years -- a 5% import duty on jewelry at the start of 2017 and a 5% value-added tax this year. This has accompanied a slump in gold jewelry imports into the UAE, with last year’s inflows roughly half those in 2014, analysts reported.
Gold jewelry consumption in the UAE has been fallen from just over 64 tonnes in 2013 to under 43 tonnes last year. Drivers include political tensions and armed conflicts in the region, weak energy prices, lower government revenues, rising living costs and deteriorating consumer sentiment.
However, analysts said they also believe that the UAE has, to some extent, declined in importance as a hub for wholesaling. For instance, jewelry imports into Iran and Iraq are thought to have grown last year, while Italian data show that through October, Italian gold-jewelry shipments to Turkey rose 35% year-on-year and to Lebanon by 75%.
Further, there has less buying by Indians visiting the UAE due to reduced price differentials between purchases at home and in the UAE. “Industry sources…inform us that jewelry imports into the UAE this year so far are severely depressed,” Metals Focus noted.
To an extent, this is partly due to some importers pulling forward imports into December last year to beat the 1st January deadline [for higher taxes]. Some are hopeful that the worst damage has now passed and that a tentative recovery could soon start, in part as wholesalers and their customers adjust to the new regime.
However, it seems highly likely that imports will remain sluggish for the entire first quarter and perhaps for the whole of 2018 due to further market share loss to other wholesaling hubs, greater purchasing at home by Indian consumers and poor sales within the UAE itself.
The consultancy cited two tax changes in recent years -- a 5% import duty on jewelry at the start of 2017 and a 5% value-added tax this year. This has accompanied a slump in gold jewelry imports into the UAE, with last year’s inflows roughly half those in 2014, analysts reported.
Gold jewelry consumption in the UAE has been fallen from just over 64 tonnes in 2013 to under 43 tonnes last year. Drivers include political tensions and armed conflicts in the region, weak energy prices, lower government revenues, rising living costs and deteriorating consumer sentiment.
However, analysts said they also believe that the UAE has, to some extent, declined in importance as a hub for wholesaling. For instance, jewelry imports into Iran and Iraq are thought to have grown last year, while Italian data show that through October, Italian gold-jewelry shipments to Turkey rose 35% year-on-year and to Lebanon by 75%.
Further, there has less buying by Indians visiting the UAE due to reduced price differentials between purchases at home and in the UAE. “Industry sources…inform us that jewelry imports into the UAE this year so far are severely depressed,” Metals Focus noted.
To an extent, this is partly due to some importers pulling forward imports into December last year to beat the 1st January deadline [for higher taxes]. Some are hopeful that the worst damage has now passed and that a tentative recovery could soon start, in part as wholesalers and their customers adjust to the new regime.
However, it seems highly likely that imports will remain sluggish for the entire first quarter and perhaps for the whole of 2018 due to further market share loss to other wholesaling hubs, greater purchasing at home by Indian consumers and poor sales within the UAE itself.
