India’s 2018 gold demand to remain below 10-year average

India is the world’s second-biggest gold consumer. (Reuters)
Updated 06 February 2018
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India’s 2018 gold demand to remain below 10-year average

MUMBAI: Gold demand in India is likely to remain below its 10-year average for a third year in 2018 as higher taxes and new transparency rules on purchases may cap last year’s rebound in buying, the World Gold Council (WGC) said on Tuesday.
India is the world’s second-biggest gold consumer and lower demand there could rein in global prices that have risen 8 percent since mid-December, although a drop in imports of the metal would help India reduce its trade deficit.
Gold consumption in 2018 will likely be between 700 and 800 tons versus 727 tons last year, Somasundaram PR, the managing director of WGC’s Indian operations, said on Tuesday. Indian demand has averaged 840 tons over the last 10 years.
Gold demand will lag because of a higher goods and services tax (GST) on bullion purchases imposed in 2017 and measures to track gold purchases, he said.
In July, the GST on gold was raised to 3 percent from 1.2 percent. India has also made it mandatory for customers to disclose their tax code, or Permanent Account Number, for high-value gold purchases.
The government moves have disrupted the business of the small jewelers that account for nearly two-thirds of India’s total sales, Somasundaram said.
“More changes are coming in like hallmarking, responsible gold sourcing, all this will continue to disrupt the industry ... It will take two years for India to reach normal demand level,” he said.
Gold is a mainstay of Indian culture, serving as the primary vehicle for household savings for hundreds of millions of people in Asia’s third-largest economy.
Gold demand in the country rose 9 percent in 2017 from 2016 to 726.9 tons as jewelry demand increased 12 percent from a year ago, the WGC said in a report published on Tuesday.
India’s imports of gold ore jumped 73 percent in 2017 from the year before to a record 245.7 tons as the import tax on the semi-pure alloy made by miners is 0.65-percent lower than on refined gold, Somasundaram said.
Dore imports will remain robust even in 2018 due to the duty difference and huge installed refining capacity of 1,450 tons, he said.
Gold smuggling in India has surged since India raised its import duty to 10 percent in August, 2013 in an effort to narrow a gaping current account deficit.
Smugglers brought around 120 tons of gold into the country in 2017, with nearly the same amount expected in 2018 unless the government reduces the import tax, Somasundaram said.


Uber agrees to pay VAT in Egypt

Updated 18 February 2019
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Uber agrees to pay VAT in Egypt

  • Egypt introduced a law last May regulating ride-hailing apps Uber and Careem
  • Uber has said that Egypt is its largest market in the Middle East
CAIRO: Uber has agreed to pay value-added tax on its services in Egypt, Egyptian officials said on Monday, a move that may help resolve a long-simmering feud with traditional taxi drivers.
The agreement would also apply to other ride-hailing companies, the head of the Egyptian Tax Authority, Abdel Azeem Hussein, said. Egypt’s value-added tax (VAT) rate is 14 percent.
“Reaching an agreement and determining the tax treatment that will be applied to the company Uber and other companies operating in the same area will enhance confidence and cooperation between the authority and the tax community,” state news agency MENA quoted Hussein as saying.
Uber Egypt was not immediately available for comment.
Egypt introduced a law last May regulating ride-hailing apps Uber and Careem, after Egyptian taxi drivers filed a lawsuit arguing that the two companies were illegally using private cars as taxis and were registered as a call center and an Internet company, respectively.
An Egyptian court suspended Uber and Careem’s services in March last year after the taxi drivers’ suit but another court stayed the suspension ruling in April, allowing the companies to operate while the case was appealed to a higher court. A verdict is expected on Saturday.
Careem could not immediately be reached for comment on whether it will pay the VAT.
Uber riders and drivers in Egypt have said they faced various technical difficulties with the Uber app in recent weeks, which two security sources said was linked to data-sharing disputes with Egyptian authorities.
Uber has faced regulatory and legal setbacks around the world amid opposition from traditional taxi services. It has been forced to quit several countries, including Denmark and Hungary.
Uber has said that Egypt is its largest market in the Middle East, with 157,000 drivers in 2017 and 4 million users since its launch there in 2014.