The gold and jewellry industry in Dubai is talking to the government to levy value-added tax (VAT) only on the making charges of the jewellry rather than the whole single piece as the new tax regime has taken shine off the yellow metal in the first quarter of this year.

Chandu Siroya, vice-chairman, Dubai Gold and Jewellery Group (DGJG), said the group has proposed that VAT to be implemented at the labour component only.

“We are talking to different sources in the government and we are very hopeful about the positive outcome of it. The government will find some solution for us… And we will go back to become a preferred choice.”

Gautam Sashittal, CEO, Dubai MultiCommodities Centre (DMCC), said: “What is important for us is to remain competitive as an industry globally. Even though the underline value of metal is quite significant, the actual margins are very small. So even 5 per cent VAT can make a big difference. So we and DGJG have made representation on how VAT regime could work and these discussions are ongoing at the moment.”

Sales of gold jewellery will spurt if VAT is levied only on the value-addition of the gold jewellery. As witnessed prior to the introduction of VAT on January 1, 2018, demand for gold jewellery had increased substantially in Dubai both from the residents and tourists.