Dubai has rightfully earned the title of the City Of Gold in the world. Gold trading is one of the most lucrative businesses in Dubai. The Gold industry adds around 20% to the total GDP of the UAE, where Dubai already contributes the lion’s share. The bustling gold sector incorporates more than 4,000 businesses, and countless professionals are directly engaged in multiple trades. Several other companies and executives, including white and blue-collared workers, are indirectly involved in the commerce of this precious metal. There are hundreds of both local and foreign investors in the gold and diamond industry of the UAE.
The world over irrespective of their country of origin and culture consider Gold as an essential asset, and people tend to invest heavily in it. They deem that money converted into Gold will be safe and secure. It is available in many forms, such as coins, bars, blocks, bullions, and jewelry. The various carats are available for trading- 24k, 22k, 21k, and 18k Gold. There are a variety of different things that need to be considered at the time of gold retail purchases, namely: Weight of Gold, Charge of craftsmanship, quality control, Wastage costs wherever relevant, and VAT tax.
Prospects of Investing in Gold Business in Dubai
Entrepreneurs and foreign investors that are keen on starting a business in the gold district can try their hand in the following different sectors.
Sourcing and Trading
Dubai and the rest of the United Arab Emirates surprisingly do not have any gold mines of their own. Most of the Gold that is used here is sourced from the African, East African, and Latin American countries. Companies involved in the Gold mining have begun the practice of ‘responsible sourcing,’ which restricts sourcing the metal from battle-ridden and politically unstable areas which are rumored to finance illicit activities.
DGCG and MCC free zone – dedicated to empowering the Gold community– corporations and SMEs have readily embraced the policy of ethical sourcing of their own free will without the Government having to enforce it. More businesses are voluntarily signing up for certification that authenticates the bullion used is sourced ethically and responsibly without harming any of the local people and environment. Gold constitutes a more substantial share of goods shipped into the UAE, which is roughly around 14% of total imports in 2018.
There are many investment and business opportunities available in the Gold refining and manufacturing business. Moreover, multiple companies are involved in the Gold-crafting process. Including both local and international firms who source the Gold themselves or from different traders operating in Dubai. The companies deploy all the newest and latest technologies to heighten their capabilities and increase the process efficiencies. The refined and manufactured Gold will advance through the supply chain, which includes many wholesalers, suppliers, distributors, and Gold retailers.
Financing and Investment
Gold is one of the notable investment devices across the globe. Though most of the Gold is sold in its natural form, there are still numerous opportunities in the last several years to invest in the electronics and home appliances industry by applying fail-safe means. Dubai Multi Commodities Centre (DMCC) free trade zone has been developed by the Dubai Government to provide market infrastructure for global goods trading exclusively for Gold and its derivatives. Organizations below DMCC like Dubai gold Delivery Standard (DGD) and Dubai Gold & Commodities Exchange (DGCE) offer amenities and financial support to local, small, and foreign corporate investors.
Perks of Investing in Gold Business in Dubai
A variety of Government and market benefits support businesses that are investing in the gold industry of Dubai.
VAT on Gold Trading
Dubai is one of the famous and reliable markets for gold investments. Tourists, visitors, entrepreneurs, immigrants, and local residents never let go of an excuse to get the precious yellow metal. Gold adornments and jewelry are available at relatively lower prices in Dubai. There is a VAT exchange mechanism in place- according to which listed and registered dealers do not charge any VAT in the event of selling the Gold to another certified dealer as long as the latter plans to resell or manufacture those products. Nevertheless, the retail customers are still charged VAT at a low rate of 5% of the total estimated value of the purchased Gold.
Corporations can decide to start the business in either a free zone that is dedicated to the Gold business in Dubai or can mainland business setup in dubai. The advantages differ between the free zones where the market is going. DMCC and Dubai Gold & Diamond free zones give a plethora of perks to the gold sector.
- Tax exemption on imports and exports
- No corporate and personal income taxes
- 100% repatriation of invested funds and profits earned
- Providing security
- Hallmarking and
- Shuttle transports for consumers.
Businesses working from the mainland, such as Dubai Gold Souk, which is a traditional gold exchange offer other compensations.
Tourists from all around the planet flock to Dubai to spend their vacations in style. Dubai presents countless fabulous happenings and adventures for tourists, both local and foreign. Dubai is has gained the title of shopper’s paradise due to the abundance of shopping selections on offer in more than forty malls situated in Dubai. The Dubai Gold Souk is a famous tourist destination with glorious displays of gold ornaments honoring the artistic skills of Dubai’s goldsmiths. In the last few years, there is a surge in tourists visiting from the Asian continent who have been very enthusiastic about shopping for gold jewelry. The immense number of gold retailers, a diversity of craftworks in gold jewelry, and the minimal taxation and other advantages have made Dubai a hotbed for Gold shopping.
Dubai World Expo 2020
Dubai is hosting the hugely anticipated World expo 2020 from October 2020 till April 2021. This exhibition is expected to raise the revenues and earnings of all the sectors of the UAE economy. Many UAE based businesses have announced plans to extend their operations before the mega event after understanding the influence of the global event and its subsequent aftermath.
We at KWS Middle East can assist our consumers with setting up a business in the gold industry. Our expert business setup consultants have years of experience in the field and have been loyally helping our clients by providing them with all the necessary legal information and required market insights. Our experts help you in making decisions that are best for your business in the long run.
In case of any queries, contact us. Our specialists, they will be more than happy to resolve your questions.