Diamond VAT To Cause Business ‘Exodus’, Says Business Leader
For traders in gold and diamonds, the need to strengthen and examine the best methods for business improvement Dubai has to offer is important in light of impending value added tax application to the products.
Ahmed Bin Sulayem, executive chairman of the Dubai free zone where gold and diamond businesses are based has raised concerns over an ‘exodus’ of businesses from the area once the new VAT rules come into effect in the United Arab Emirates.
He is the first senior businessman to speak out on the tax, raising concerns that businesses would flee to the likes of Hong Kong and Singapore in a strongly worded letter to the Dubai Diamond Conference, according to Arab News.
Describing the feeling of uncertainty, he said: “The introduction of VAT here in the UAE next year, while one of the lowest (rates) in the world, leaves us, our member companies, and our industries genuinely concerned.”
Despite the low 5 per cent tax rate, he pointed out examples such as Germany and Hollandm who saw their precious gem and gold trade move to Belgium and Luxembourg when taxes were introduced.
The Dubai Multi Commodities Center is the third largest diamond trading centre in the world, after Mumbai and Antwerp, growing spectacularly in the last 15 years, however, traders are now concerned, with demand for the product at an ebb, that this hard work may be undone.
Ahmed Bin Sulayem says he hopes to have further feedback from the Dubai government on a plan for the industry once VAT is put in place.