President orders removal of crippling gem levies
President Maithripala Sirisena recently ordered the removal of crippling levies on the gem and jewellery trade followed concerns raised by the Sri Lanka Gem and Jewellery Association (SLGJA).
Association officials said a decision about 2-3 months ago by the National Gem and Jewellery Authority (NGJA) to impose a levy of Rs. 25,000 per 100 carat on gem export sales or contracts and increasing the licence fee to half a million rupees from only Rs. 35,000 earlier brought the trade to crisis-point proportions.
After a delegation from the association briefed the President on the ad-hoc levies, the head of state had instructed the NGJA to remove these levies and the license fee.
Accordingly the NGJA board decided to remove these levies and the decision was conveyed to the SLGJA, officials said thanking the President profusely for reversing a decision that would impact heavily on the trade.
The recently-fixed rates had resulted in a slide in gem exports. The industry has been enjoying income tax exemption for the last 40 years since 1979, but the new Inland Revenue policy has removed this exemption, despite elaborate representations made to the government to reinstate this relief, they said.
The SLGJA pointed out earlier that due to the new tax policy, supplies from Africa which now comprise up to 70 per cent that are imported and re-exported from Sri Lanka, was affected.
These rough gem stones from Africa to Sri Lanka have in fact started to go to competitor countries like Thailand and Hong Kong, the SLGJA lamented.
Officials point out that in order to facilitate good gem stone supplies and re-export quality products, good gem stones should be supplied to the gem cutting sector. While the recent budget approved the removal of the NTB on gem stone exports, the authorities are yet to implement this proposal.
While the online gem stone and jewellery sales market is becoming very large and a multi-billion dollar market in the world, current export procedures and changes pursued by the authorities render it infeasible to carry out an on-line business.
The recent 15 per cent tax on gold imports has also badly affected jewellery manufacturers, retailers and exporters in the country. “There should be an immediate solution to facilitate gold bullion at competitive rates to the legitimate jewellery manufacturers, exporters and retailers,” one official explained.
The gem export process should be liberalized on par with such countries like Thailand and Hong Kong where companies in those countries are able to efficiently and competitively cater to the demands of the international market, the SLGJA points out.