The introduction of the five per cent value-added tax (VAT) on loose diamonds — both rough and polished diamonds — in the United Arab Emirates (UAE) starting January 2018, is likely to be challenging to the Indian importers of rough diamonds and those selling polished diamonds in UAE, says a news report.

In the last few years, UAE has emerged as the world's largest diamond trading hub after Antwerp. The said VAT is expected to have to shell out 5.25 per cent tax on the value of the rough diamonds. The Indian government has already levied 0.25 per cent GST on the import of rough diamonds, adds a news report.

A number of big diamond companies in India have set up their offices in the Dubai Multi Commodity Centre (DMCC) in the last decade following the tax-free environment. A significant value of rough diamonds are imported from UAE every year, says a news report.

The value of diamonds traded in the UAE rose to $26 billion in 2016 compared with $300 million in 2002 when the DMCC was established.

Source: Times of India