Due to its strategic location connecting the eastern and western worlds, Dubai is an age-old traditional trading market in the Middle East region. Our blog further focuses on the explanation of the benefits of investing in the gold business in Dubai.
Dubai: The City of Gold
Spices, pearls, textiles, and traditional homewares are among the things traded in Dubai's heritage souks. Many precious metals, such as gold, silver, and diamonds, are traded in Dubai. Dubai is renowned as the 'City of Gold' because of the growing sector involved in the trade of valuable yellow metal. One of the most profitable businesses in Dubai is gold trading. The sector accounts for over 20% of the UAE's GDP, with Dubai accounting for the lion's share. More than 4,000 enterprises actively involved in various precious metal trades make up the thriving community. The gold and diamond sector has hundreds of investors.
Many individuals, regardless of culture, regard gold as both an investment and a form of security. It comes in the form of coins, bars, bullions, and jewellery, and it can be traded. 24k, 22k, 21k, and 18k gold are the different carats available for dealing. Weight of gold, a fee of workmanship, waste costs when applicable, and VAT tax are all charges that apply to gold retail purchases.
What are the Benefits of Investing in Gold Business in Dubai?
Companies who invest in the gold business benefit from a variety of government and market-based incentives. The benefits of investing in gold business in Dubai are discussed in detail below:
Location Related Benefits
There are several places where gold, diamonds, and other precious metals are traded for lead. Companies can opt to launch their business in one of Dubai's free zones or on the mainland. The advantages differ depending on which zones the company operates in. Tax exemption on imports and exports, no corporate and income taxes, 100 per cent repatriation of cash, and security, ambience, Hallmarking, and shuttle transportation are only some of the privileges offered by DMCC and Dubai Gold & Diamond free zones. Companies based on the mainland, such as Dubai Gold Souk, a traditional gold market, provide additional benefits.
Gold is a popular ornamental metal. Gold is regarded as a symbol of riches and status among the people. In many instances, symbolism is used to represent opulent lifestyles. The expats from other nations who work and save money in Dubai are the other main local customers. Citizens from the Indian subcontinent make up a sizable portion of the expatriate community, and gold has traditionally played a key role in all of the subcontinent's festivities, making them ideal customers. These advantages, combined with very low taxes, have generated a lot of opportunities for gold firms in the local market. Furthermore, many residents and expatriates spend their wealth on gold financial goods.
Tourists from all around the world visit Dubai for their vacations. Tourists can enjoy a variety of exciting encounters and adventures in Dubai. Due to a large amount of shopping options available in Dubai's more than 40 malls, it is also known as a shopper's paradise. The Dubai Gold Souk is a prominent tourist attraction with magnificent exhibits of gold crafts that showcase artistic abilities. In recent years, there has been an increase in the number of tourists from Asian countries who have come to purchase gold jewellery. Dubai has become a popular gold shopping destination due to its large number of gold stores, diverse gold jewellery craftworks, and tax and other perks.
Dubai is a well-known gold-buying destination. Tourists, immigrants, and residents never pass up the chance to purchase the yellow metal. In Dubai, gold ornaments and jewellery are available at significantly reduced prices. A VAT reverse charge mechanism exists, under which registered dealers do not charge VAT when selling to another registered dealer who plans to resell or manufacture such products. Retail buyers, on the other hand, are charged VAT at a flat rate of 5% of the total value.
Which Sectors of Gold Business Can Be Invested In?
Investors interested in beginning a firm in the gold-related business might look into the following industries:
The gold refining and technology sector is home to a slew of businesses. They include both domestic and international enterprises that import gold themselves or from various Dubai vendors. Businesses are utilising the most up-to-date technologies in order to improve their capabilities and operational efficiencies. The gold goods created and assembled will transit through the chain, which includes several wholesalers, distributors, and gold merchants.
Investment and Funding
Gold is one of the world's most valuable investment assets. While the majority of retail gold is sold in physical form via reliable methods, there have been various opportunities to invest in technological items in recent years. The Dubai Multi Commodities Centre (DMCC) free zone was established by the government to provide market infrastructure for global commodity trade. The Dubai Gold Delivery Standard (DGD) and the Dubai Gold & Commodities Exchange (DGCE), for example, provide facilities and financial instruments to retail and institutional investors.
Procurement and Exchange
In Dubai and, to a significant extent, its partner Emirates, there are no commercial gold mining. Much of the gold was distributed to African and Latin American countries. Companies have also embraced the 'ethical sourcing' strategy, which restricts the acquisition of metal from conflict-affected and high-risk areas that support illicit operations. DGCG and MCC free zone enterprises have already implemented the ethical sourcing policy. More businesses are registering for certification that verifies the bullion used responsibly and ethically. Gold accounts for a larger share of products imported into the UAE, accounting for almost 14% of total imports in 2014.
Investing in a Gold Business in Dubai may be one of the most profitable ventures to invest in. But on the other hand, licensing, approvals and several other paperwork is to be completed. Dhanguard can assist you throughout the business setup process and investment options. If you are looking forward to business setup services or banking consultancy in Dubai, connect with us, we will gladly assist you.