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Dubai Trade Warns Against Diamond Tax
Oct 17, 2017 5:02 AM
By Avi Krawitz
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RAPAPORT... The introduction of value added tax (VAT) on loose
diamonds would strongly jeopardize growth opportunities in the United Arab
Emirates (UAE), Dubai’s diamond leadership warned on Monday.
“The possible cost implications of a VAT introduction for
UAE traders are huge,” Peter Meeus, chairman of the Dubai Diamond Exchange,
said on the opening day of the Dubai Diamond Conference. “In a business where
profit margins are very thin, every quarter of a percent is important for
traders handling billions of dollars to decide where to ship the goods.”
The UAE government is planning to introduce a 5% VAT
charge on rough and polished diamonds traded within the Emirates on January 1,
marking a significant change in UAE policy. Many see its zero tax system as a
key stimulus for growth experienced in the local diamond industry in the past
decade.
“Our trading roots trace back to the principles of a tax-free
environment for import and re-export and a mind-set that industry drives
government, not that government drives industry,” said Ahmed Bin Sulayem,
chairman of the Dubai Multi Commodities Centre (DMCC).
The value of diamonds traded in the UAE rose to $26
billion in 2016, compared with $300 million in 2002 when the DMCC was
established.
Meeus cautioned that if the tax was applied, all that the
Emirates had achieved in the past 15 years would have been for nothing, and
that centers such as Hong Kong, Panama and Singapore stood to gain.
The tax issue ranked among the key topics raised at the
Dubai Diamond Conference, with a panel discussion exploring its implications
scheduled for Tuesday, the second and final day of the event.
The opening day also featured panel discussions on how the
diamond industry could achieve the United Nations Global Sustainability Goals,
and a separate discussion on marketing to millennials.
Image: shutterlk/Shutterstock
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Tags:
Ahmed Bin Sulayem, Avi Krawitz, DMCC, Dubai, Dubai Diamond Conference, Dubai Diamond Exchange, Dubai Multi Commodities Centre, Emirates, loose diamonds, tax, uae, United Arab Emirates, United Nations Global Sustainability Goals, value added tax, VAT
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