Dubai: The sixth edition of the annual Dubai Precious Metals Conference (DPMC) hosted by DMCC, which was held in Dubai recently, came to a conclusion with the focus on Taxation Plans on the concluding day. The conference was attended by over 300 delegates across the value chain.
The theme for this year’s conference was ‘Connecting Markets - the New Era of Global Trade’; and it covered several topics relevant to the trade “including the implications of taxation of gold in global hubs; the applications of the global gold Shariah standard; current geopolitical challenges and the importance of branding in the global precious metals industry”, DMCC said.
The topic that garnered most interest and attention was regarding the proposed introduction of a 5% VAT on non-essential luxury goods from January 2018, agreed across the Gulf Cooperation Council (GCC). It is expected that in the first year in the UAE alone an estimated AED12 billion is expected to be generated from VAT.
Jeff Rhodes, CEO of Dubai-based Zee Gold commented: “A 5% increase on the value added, meaning the mark-up over and beyond the price of the metal, would be acceptable.”
Tony Dobra, Executive Director of London’s Baird & Co, emphasised: “Based on other markets’ experiences, I would urge the Dubai government to ensure the rate is kept simple and low. Looking back at what happened in the UK in 1983, the industry was severely impacted upon the introduction of a 15% VAT on gold followed by a 20% rise swiftly after.”
An on-the-spot poll on the launch of the global Shariah gold standard in 2016, indicated that 60% of delegates agreed that “it is a game changer for the industry and would help galvanise investments”.
Andrew Naylor of the World Gold Council said: “Until recently, there was a lack of international consensus among scholars on the Shariah treatment of contemporary gold products. Therefore, it is important to recognise the breakthrough achieved so far. The fact that investing in gold is now fully compliant with Shariah principles is truly ground-breaking for Islamic investors and the gold industry at large.”
The importance of the move can be understood from the fact that analysts peg the worth of the currently available pool of Islamic finance at around US$ 6.5 trillion. And as Christophe Lalandre of Switzerland-based bank Lombard Odier pointed out: “Just tapping into 1% of the available Islamic finance pool is equivalent to US$ 65 billion.”
DMCC’s Executive Chairman, Ahmed Bin Sulayem, in his closing remarks at the end of the two-day conference said: “As a leading commodities hub and the world’s best Free Zone, DMCC stands strong as a market maker for the global trade of gold and precious metals. Key to this is connecting businesses and providing them with the right environment to grow in Dubai and beyond.”
He noted that the past three years have been difficult in terms of trying to gauge where the markets are headed and that 2016 was no exception. “The forthcoming taxation will certainly add to the uncertainties we witness on a global level, and although we do not expect a direct impact on DMCC as a Free Zone in terms of gold bars, and rough and polished diamonds, this does not mean that we should stand aside,” Bin Sulayem added. “In fact, collective efforts are now needed more than ever to navigate the challenging conditions.”
