Soon a new Gold Refinery for economic renewal
Sri Lanka is actively exploring the establishment of a domestic gold refinery to address enduring shortages and high import taxes that have driven the gold trade underground.
The National Gem and Jewellery Authority (NGJA) is set to set up a facility that will import raw or less-refined gold, process it domestically, and supply local jewellers and the Central Bank and re-export the rest.
Due to over 45 per cent import taxes enforced under the International Monetary Fund (IMF) programme, formal gold imports came to a standstill, fostering a black market. A local refinery aims to formalise this trade.
S.P. Chaminda, Chairman of the National Gem and Jewellery Authority (NGJA) told a media conference in Colombo recently that” the authority is pushing for this refinery, alongside tax reforms like a single tax on gems, to boost value addition,
It will make gold more accessible, and reduce illicit trade that drains foreign exchange and harms the legitimate industry. The refinery is expected to import less refined gold from producing countries like South Africa, he disclosed.
Current high import duties and taxes (including 18 per cent VAT and other levies) make legal gold imports difficult, encouraging illegal smuggling, he said adding that high prices due to taxes make gold unaffordable for consumers, constraining the local jewellery market and threatens businesses. The government is receptive to industry proposals for tax simplification, including a single tax system for gems and a potential tax-free import quota, a senior official of the Finance Ministry revealed.
The idea is that lower duties on higher volumes will generate more government revenue than the current high taxes on limited legal imports, he told the Sunday Times Business.
Establishing a refinery requires significant capital, technical expertise, and reliable power/inputs all costly in Sri Lanka’s fiscal environment, several energy experts said. The cost of large refinery projects could be in the region of US$30 million-$50 million+ for robust industrial plants.
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