Pre-VAT rush to buy gold, second phase to be implemented from July 1.
GOLD appears to have regained its shine as jewellers in Bahrain are reporting a surge in demand weeks before the rollout of the second phase of a key levy.
The second phase of Value Added Tax (VAT) will be implemented from July 1.
Businesses with a turnover exceeding BD500,000 need to register mandatorily by June 20, whereas it is voluntary for companies with turnovers of BD37,500 and above, for whom the deadline is December 20.
VAT registration for companies with turnovers below BD37,500 is optional.
GCC Gold, Pearls and Jewellery Association treasurer Mohammed Malim said the sector is recording a healthy "pre-VAT" rush.
"More than 300 jewellers will be covered in the second phase of VAT rollout and they have already started registering with the authorities," Mr Malim told the GDN yesterday.
"Traders have amended their invoices and systems as part of implementation of the tax at the rate of five per cent."
He added that Bahrain's jewellery sector has already benefited from a delay in the implementation of VAT, which was introduced in Saudi Arabia and the UAE in 2018.
Bahrain started imposing the new tax on telecommunications services, clothing and apparel, hotels and restaurants and vehicles from January this year.
"There is no doubt the Bahrain's jewellery market benefited from the Saudi and UAE customers, but even now we are witnessing a good pre-VAT rush.
"I am aware that the Assay Office is receiving large quantities of jewellery daily to be hallmarked and this is expected to continue until VAT is applied starting July 1.
"Once the new tax is applied, a gold ornament worth, say, BD1,000 will cost BD1,050."
Mr Malim said he expected sales to soar during Eid holidays and the rest of next month but predicted a dip in demand after that.
"The Saudi gold market was hit in the first six to eight months after VAT was introduced there, with authorities then relaxing some rules at the wholesale level.
"Right now, we don't have any exemptions but would like to see some relaxation of the rules in the near future."
However, he said consumer sentiment will gradually adapt to the VAT.
"Bahrain's gold standard is high and we have a good supply of traditional jewellery, which makes it the top choice for local and Gulf customers."
Mr Malim said a majority of the gold traders have registered with the National Bureau for Revenue to get their respective VAT account number.
The bureau has warned that those failing to register within 60 days after June 20 will be penalised a maximum of BD10,000.
Failing to submit a VAT return or not making a payment within the required period will attract a penalty of between 2.5pc and 5pc of the tax amount due.
Finance and National Economy Minister Shaikh Salman bin Khalifa Al Khalifa told MPs earlier this month that the bureau was expecting revenues of around BD213.7 million this year and BD269.9m next year from VAT and excise duty.
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|Publication:||Gulf Daily News (Manama, Bahrain)|
|Date:||May 28, 2019|
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