On a worldwide scale, Dubai has consistently presented profitable gold trading, which has earned it the moniker of “city of gold”. However, if you want to capitalize on the gold trading industry in Dubai, you will need a gold trading license.
In this article, we will walk you through the benefits, regulations, and requirements for foreign companies to join the gold trading industry in Dubai.
Overview of the Gold Trading Industry in Dubai
Why Start a Gold Trading Business in Dubai?
Dubai’s gold market has been established as one of the most profitable trading hubs for both locals and foreigners. This is mainly thanks to the emirate being alongside major centers like Switzerland and London in terms of gold trade volume. As such, there are several benefits for traders and investors alike in joining Dubai’s gold trade:
- Tax Benefits: 0% corporate income taxes
- VAT Exemption for Dealers: Registered gold dealers can sell to each other without adding VAT if the buyer intends to resell or produce items from the gold.
- High Liquidity: Traders can buy and sell gold with minimal price fluctuations, enabling quicker transactions and reduced risk.
Regulatory Framework Governing Gold Trade in Dubai
To promote transparency, reliability, and compliance with international standards for gold trading, Dubai has created a strong regulatory framework. This framework is managed by various entities, each responsible for specific areas and tasks:
- Dubai Department of Economic Development (DED): The DED governs trade name registrations and licensing approvals, ensuring compliance with local legal and operational standards. The department is also responsible for regulations related to consumer protection and business activities.
- Securities and Commodities Authority (SCA): The SCA is the main federal agency responsible for overseeing the trading of commodities, including gold, throughout the UAE. It creates rules for licensing, trading methods, and market behavior to ensure that trading is fair and transparent.
- Dubai Gold & Jewellery Group (DGJG): The DGJG refers to the gold traders in Dubai and aims to promote the jewelry industry both locally and internationally. This trade body includes manufacturers, retailers, and wholesalers.
- Dubai Gold and Commodities Exchange (DGCX): The DGCX is a platform where traders can buy and sell contracts related to gold without the worry of price fluctuations. It should be noted that there are specific regulations and membership requirements to join this platform.
- Dubai Multi Commodities Centre (DMCC): The DMCC refers to a free trade zone in Dubai where businesses can trade different commodities. It also regulates gold trading activities and offers a comprehensive range of services, including licensing, warehousing, and facilitating trade across global markets.
Securing a gold trading license in Dubai for your company
What is a gold trading license in Dubai?
Gold trading is a highly regulated business in the UAE. The only way to participate in the gold market in Dubai is through a gold trading license. A gold trading license authorizes your company to:
- Buy and Sell Gold
- Participate in Gold Derivatives
- Manufacture and Retail Gold
- Access the Gold Market
For more details, we have an insightful guide on trade licenses in Dubai.
How to Secure a Gold Trading License in Dubai, UAE?
Applying for a gold trading license in Dubai can only be done after registering your company in Dubai. The application process and issuing authority will depend on the jurisdiction under which you are registered:
- Mainland: Regulated by the Department of Economic Development (DED) and allows you to operate throughout Dubai without restrictions on market access.
- Freezone: This jurisdiction allows 100% foreign ownership and tax exemptions, and options like the Dubai Multi Commodities Centre (DMCC) as an area of operations. It should be noted that choosing this jurisdiction requires adherence to specific regulations set by the free zone authority, including strict anti-money laundering (AML) and know-your-customer (KYC) protocols.
For more information, we have an article on the difference between a Mainland and Free Zone company in the UAE.
The exact cost for your license will vary based on the type of business structure, the office space required, and the licensing authority involved. Typically, fees range from approximately USD 4,300 to USD 7,700. It typically takes seven to ten days for the application to be processed and approved.
Emerhub’s local market experts can help you determine the right jurisdiction for your planned operations, as well as navigate the license application process in your stead. Our team can also help ensure ongoing compliance by helping you set up your corporate bank account in Dubai.
Are you ready to start gold trading in Dubai? Fill out the form below and get in touch with our advisors today!