The Sri Lanka Gem and Jewellery Association (SLGJA), highlights the need for a more business friendly environment, addressing the impact of high taxes, including the Value-Added Tax (VAT), on the local gem and jewellery industry.
The current 18% VAT on the import of rough and finished gemstones—intended for re-export or for value-added sales to visiting tourists — has influenced the industry’s dynamics. By fostering a more supportive environment, Sri Lanka can enhance the sustainability and growth of its gem and jewellery sector.
The gem and jewellery industry in Sri Lanka is a vital part of the nation’s economy, over 600,000 people depend on this industry for their livelihoods
The SLGJA had previously warned that the imposition of 18% VAT would increase the risk of relocation to emerging competitor hubs like Dubai, India, Hong Kong and Thailand. Each of these countries maintain single-digit VAT rates for their respective gem and jewellery industries. Sri Lanka too can benefit from a competitive system, that allows businesses to remain in the country.
President SLGJA Ajward Deen, said these taxes are a deterrent for dealers, who take risks with their own money. “Banks do not provide loan facilities for this trade, which further complicates the situation for such businesses.”
It must be noted that the VAT on Foreign Currency Sales, consumed overseas, without any refund mechanism, is also discouraging sales to tourists and not being competitive.
Additionally, reducing the 36% tax on net profit an 18% VAT on imported goods could make Sri Lankan gems and jewellery more competitive globally.”
Sri Lanka has garnered a reputation for being an ‘Island of Gems’ and has had a long and celebrated history in the gem industry.
The industry has been an integral part of the Sri Lanka’s cultural heritage.
The economic impact of the industry is substantial as it is a vibrant source of foreign exchange, which is vital for the countries stability.
On a global scale, the countries reputation for producing high-quality gemstones has been well established.To maintain this reputation, it is vital that the necessary support be provided.
If a more business friendly environment is created in Sri Lanka, then it is possible for the nation to retain its gem and jewellery businesses and grow even stronger than before.
