Gold trading is one of the most lucrative businesses in the United Arab Emirates. Meanwhile, Dubai is rightfully maintaining the title of the “city of gold” in the world. Ambitious companies and investors can start a gold trading business in Dubai to tap into the booming jewelry potential.
The gold industry adds around 20% to the total GDP of the UAE. Whereas, Dubai contributes the lion’s share, with Abu Dhabi and Sharjah following closely. The bustling gold sector incorporates more than 4,000 businesses, and countless professionals are directly engaging in multiple trades.
Several other companies are indirectly taking part in the trading of the precious gold metal. Also, there are hundreds of both local and expatriate investors in the gold and diamond industry of the UAE. Many business executives, and white and blue-collared workers are in this business as well.
Process to register a gold business in Dubai
Booming economy of the UAE turns out the gold trading business in Dubai a lucrative idea. The prosperous Emirati population, foreign expatriates, and tourists take special interest in buying the jewelry. Thorough planning, well-thought strategy, and professional guidance streamlines this step-by-step procedure.
- Choose business name and trade name
- Pick right gold business activities
- Decide suitable business jurisdiction
- Get initial approval with NOC
- Make comprehensive business plan
- Select right business model
- Create business bank account
- Acquire general trade license
- Pay applicable regulatory fee
- Run business operations after approval
Now, we briefly look upon the procedure of opening a gold business in Dubai.
Choose business name and trade name
The company name of your gold trading business in Dubai must adhere to the UAE’s corporate naming policies. Ensure to exclude offensive language or indecent references to Allah or Islam. Come up with a trade name that perfectly aligns with your brand and Emirati core business values.
Pick right gold business activities
Gold trading companies in Dubai must choose their business activities for their license application, to legally operate in the UAE. Regulatory authorities like DED allow them to carry out several business activities in the gold and jewelry sector. However, they can only conduct the gold business activities for which they get the approval.
Decide appropriate business jurisdiction
Starting a gold trading business in Dubai requires choosing from two major jurisdictions — Dubai mainland or free zones. Each area has mandatory procedure and essential legal documentation for establishing a gold trading company in Dubai. Free trade zones of Dubai provide taxation exemption and extra perks.
Get initial approval with NOC
Take an initial approval for your UAE gold firm in the form of a no-objection certificate (NOC). You can get the NOC in Dubai from DED (Department of Economic Development). Afterwards, you can go ahead to fulfill other steps of the process.
Make comprehensive business plan
Creating business plan is essential for outlining goals, strategies, target market, revenue forecasts, and anticipating expenses in the UAE. It lets a gold trading business to list its objectives, operational mechanism, and income generation details. A comprehensive business plan ensures the right direction for your new gold venture in Dubai.
Select right business model
This is crucial to choose the right business model while launching a gold enterprise in the UAE. Trading in the gold market offers the opportunity to buy and sell gold physically or through financial exchanges. Gold retail involves directly selling jewelry to consumers, whereas gold wholesale involves bulk gold-bar transactions.
Establishing a gold refinery is a more complex and capital-intensive endeavor. It focuses on transforming the impure gold ore into market-ready products. Dubai offers various business structures to suit different needs and preferences of the gold sector.
Create business bank account
You need a corporate bank account in the UAE to conduct the transactions. Accordingly, you can effectively run the operational activities of the gold trading business in Dubai. It involves the funding of procurement and other supply chain operations.
Acquire general trade license
Obtaining a license is crucial for beginning a gold setup in the United Arab Emirates. You have to take a general trade license from the Department of Economic Development (DED). Because, it enables gold firms in the UAE to carry out most of the permissible business activities.
Pay applicable regulatory fee
Submit all the legal documents to the DED to fulfill the licensing requirements. Pay the fee for the general trade license to the DED. Fetch the other licenses (if essential) and clear all the dues.
Run business operations after approval
DED issues the general trade license if all requirements are met. Subsequently, your gold trading business in Dubai can start the company operations. In case, you get rejection, rectify the discrepancies, and appeal again to get the approval.
Necessary documents for gold trade license in Dubai
These documents are essential to meet the legal requirements for gold trade license in Dubai.
- A valid passport
- Copy of the UAE visa
- NOC from DED or the free zone authority
- A clear business plan
- MoA and AoA
- UAE ID number (if applicable)
- Lease/Ejari certificate
- Other regulatory permits (if applicable)
- Complete license application
- Fee receipt
Types of the gold businesses in Dubai
Globally, people consider gold as an essential asset, irrespective of their country of origin and culture. Similarly, companies tend to invest heavily in it, deeming that money conversion into gold is safe and secure. Entrepreneurs and foreign investors can start a gold business to reward from this luxury metal.
Gold is available in many forms, such as coins, bars, blocks, bullion, and jewelry. The various qualities of gold in purity are available for trade — 24K, 22K, 21K, and 18K. Moreover, the weight of the precious gemstones in carats is important as well.
You need to consider a variety of different things at the time of selling and purchasing gold. For example, weight of gold, charge of craftsmanship, quality control, wastage costs wherever relevant, VAT tax, etc. You can try your hand in the following different kinds of gold businesses in Dubai.
Let’s discuss these classifications of gold businesses in Dubai.
Sourcing and trading gold ore
Surprisingly, the United Arab Emirates and Dubai do not have any gold mines of their own. The UAE was the 4th largest gold importer globally in 2021, with imports worth of $46 billion. Gold was number 1 among the goods shipments into the UAE in the same year.
UAE imports most of the gold from the African, Asian, European, and Latin American countries. Mali ($7.32B), Zimbabwe ($3.5B), Sudan ($2.82B), Niger ($2.68B), and United Kingdom ($2.46B) are the biggest gold sellers to the UAE. Companies participating in the gold mining abroad have begun the practice of “responsible sourcing”.
They restrict sourcing the metal from battle-ridden and politically unstable areas to avoid any likely financing illicit activities. Corporations and SMEs readily embrace the policy of ethical sourcing of precious metals on their freewill without the government enforcement. Gold companies are voluntarily signing up for certification that authenticates the bullion sourcing is ethical and responsible.
The UAE was the 2nd biggest exporter of gold, with exports worth of $32.8 billion in 2021. Gold exports were the 3rd largest among the goods delivery from the UAE. Switzerland ($7.47B), India ($7.03B), Hong Kong ($6.55B), Saudi Arabia ($2.96B), and Turkey ($1.52B) are the largest gold buyers for the UAE.
Refining gold for jewelry production
There are many investment and business opportunities available in the gold refining and gold-bar manufacturing business. Likewise, multiple companies are working in the jewelry crafting process. They include both local and international firms, whether they 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. After the refining process, pure gold advances through the supply chain. It includes many suppliers, distributors, whole-sellers, and gold retailers.
Making elegant gold ornaments
Gold is one of the notable means of the investment across the globe. Although, most of the gold is sold in its natural form. There are still numerous opportunities to invest in the gold and ornaments industry by applying fail-safe means.
Dubai Multi Commodities Centre (DMCC) free trade zone provides market infrastructure for global goods and precious products. Its subsidiary Dubai Gold & Commodities Exchange (DGCX) is empowering the community of 267 gold businesses and jewelers. Gold Standard DMCC, another organizations under DMCC maintains Dubai Good Delivery Standard (DGD) for Gold. It offers amenities and financial support to local, small, and foreign corporate investors.
Suitable areas for the gold trade in Dubai
Companies who want to start a gold business in Dubai can choose a free zone if they trade globally. Or they can select mainland business setup in Dubai, if they have to trade onshore. These are the areas that you can consider for this purpose.
Next, we take a brief look on these appropriate areas to trade gold in Dubai.
Gold and Diamond Park
Dubai’s Gold and Diamond Park (GDP) is a prime location for creation and retailing for gold items and precious stones. Since its establishment by Emaar properties in 2011, Gold & Diamond Park has 118 gold manufacturing units. Also, it is home to around 100 gold retailer shops/brands and 350 offices.
DMCC
From its founding in 2002, Dubai Multi Commodities Center (DMCC) offers 100% business ownership and well-built infrastructure. Features of owning freehold property and a 50-year tax holiday an ideal spot for trading gold in Dubai. Also, DMCC provides gold warehousing facilities and office spaces for gold brands.
Dubai Mainland
Setting up a gold trading business in Dubai on the mainland offers several perks. For instance, more retail space, 0% VAT and personal income tax, no minimum capital requirement, etc. A 9% corporate tax rate applies on gold companies in Dubai mainland, but the greater customer-base offsets it.
Gold Souks of Dubai
The glittering gold souks (traditional markets) are ideal to begin a gold business in Dubai onshore. They constitute a well-known import and export area for the international gold trade. Consider these gold souks for buying and selling gold in the mainland.
- Deira Gold Souk
- Mall of the Emirates Gold Souk
- Dubai Mall Gold Souk
- Al Fahidi Street Gold Souk
- Dubai Marina Mall Gold Souk
Deira Gold Souk
Start a gold business in Dubai for retail in the Deira Gold Souk. More than 300 gold retailers here are providing exquisite gold jewelry. Furthermore, it is better choice for wholesale trade of gold ornaments as well.
Advantages of investing in a gold business in Dubai
A variety of government and market benefits support businesses that are investing in the gold industry of Dubai.
Here we briefly elaborate the rewards of investment in a gold business in Dubai.
Tap into tourism
Tourists from all around the planet flock to Dubai to spend their vacations in style. The UAE presents countless fabulous happenings and adventures for tourists, both local and foreign. Dubai is known as the shopper’s paradise due to the abundance of shopping selections on offer in 40+ gold malls.
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.
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 throughout the UAE. Listed/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.
Other perks
The advantages differ between the free zones where the market is going. DMCC and Gold & Diamond Park free zone give a plethora of perks to the gold sector. They include the following.
- 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.
Future potential of the gold trade sector in the UAE
Dubai Precious Metals Conference (DPMC) has released a special edition of its Future of Trade thought leadership report. Predicting an “Asian Century” for gold, the report focuses on the
development of new gold economic corridor among BRICS nations. Including the UAE, the BRICS countries provide an alternative to traditional global gold trade centers.
The UAE is forecast to become one of the most important hubs for the international gold trade. By leapfrogging the United Kingdom, the UAE is set to become the second-largest gold trade hub worldwide. Also, over USD 129 billion in total gold trade denotes the progress of the industry in the UAE.
Another report “Trade, Technology and Markets in Transition” provides insights into the current state of global gold and silver markets. The geopolitical challenges, including sanctions against Russia, are shaking the global financial economy. These factors can affect the European supply chain, and can boost the Asian gold economy.
The UAE delivers benefits like foreign expat employment, 100% ownership, low corporate taxes, and a hallmarking facility from Dubai Municipality. Recently, it has began providing premium commercial leasing to entrepreneurs taking an interest in the gold trade. Therefore, the UAE is turning into a popular choice for the foreign gold trading companies.
Conclusion
Dubai World Expo 2020 exhibition grew the revenues and earnings of all the sectors of the UAE economy. Many UAE based businesses are extending their operations after the mega event. In its subsequent aftermath, and continuing tourism to the UAE, gold businesses are thriving and jewelry trade is booming.
Professional business advisors can assist the entrepreneurs with setting up a business in the gold industry. These expert business setup consultants have years of experience in the field. They loyally help the clients by providing them with all the necessary legal information and necessary market insights.
In case of any queries, get in touch with KWS Middle East. Our specialists are more than happy to resolve your questions. They assist you in making decisions that are best for your business in the long run.
FAQs about starting a gold trading business in Dubai
These are the answers to the frequently asked questions on establishing a gold trading business in Dubai.
The cost of the general trade license for a gold business in Dubai begins from AED 15,000. However, the overall licensing expenditure greatly vary depending on the legal jurisdiction, business type, and operational activities. Overall, the gold trade license price can increase to AED 50,000 due to the higher scope of the business.
UAE government’s mints purchase raw gold from miners, recyclers, or refiners. They make gold coins, gold bars, pure gold tiles, and gold ash. Jewelers create the gold ornaments to sell themselves, or send the gold products to the precious metal wholesalers.
Forex trading in gold starts with a small capital of $100. Gold futures needing margin requirements ranges from several thousand to tens of thousands of dollars. Forex trading in gold requires varying capital and depends on the contract size.
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