UAE: Why do shoppers buy gold, jewellery in Dubai and sell in other countries?

Shoppers are increasingly buying gold and precious metal jewellery in Dubai and the selling the valuables in other countries - particularly South Asian ones.

Industry executives say that consumers do this due to the trust they have in the quality of the gold and jewellery sold in Dubai. Buyers also benefit from the disparities in the prices.

Moreover, some countries also levy tax on gold and jewellery purchases above a certain amount and there is no tax on buying gold jewellery in Dubai. If passengers exceed the permitted limit to carry gold and jewellery, the items could be confiscated by the authorities or passengers are asked to pay customs duty, depending on the policies of the each country.

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For instance, an Indian male passenger who has been residing abroad for more than a year is allowed to carry jewellery for a value of Rs50,000 (Dh2,213), whereas a female passenger can carry jewellery worth Rs100,000 (Dh4,425).

UAE residents and visitors carrying more than Dh60,000 worth of cash, gold, jewellery, diamonds and other valuables are required to disclose it while travelling into or out of the country.

“We have observed customers buying gold jewellery in Dubai and selling it in other countries, especially India. However, this practice is primarily influenced by the disparities in gold prices, rather than differences in quality," said Shamlal Ahamed, managing director of international operations, Malabar Gold and Diamonds. "Gold prices in Asian countries such as India are around 12-15 per cent higher than that in Dubai, which converts to a significant profit for consumers who engage in such cross-country buying and selling."

On Wednesday, the 24K variant of the precious metal was trading at Dh246.5 (Rs5,570) per gram in Dubai. Comparatively, the 24K was trading at Rs6,323 per gram (Dh280) in India.

Last month, India hiked the import duty on gold and silver findings used in making jewellery and on precious metal coins from 11 to 15 per cent, to bring them in line with duties on gold and silver bars.

In a notification issued earlier, India's Ministry of Finance also hiked the import duty on spent catalysts containing precious metals from 10.1 per cent to 14.35 per cent.

• Why UAE shoppers are buying more gold bars, coins than jewellery