Wednesday, April 17, 2024

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VAT 18 hit Gem and Jewellery sector to get concessions for survival

By: Staff Writer

March 17, Colombo (LNW): In the wake of VAT 18 hitting the Gem and Jewellery industry compelling its closure, the Government has announced concessions to those who engaged in this sector.

The gem and jewellery industry warned that the Government’s decision to bring it under the Value Added Tax (VAT) regime will force closure, the private sector relocating overseas or reverting to the informal sector.

Import of precious stones, a key input for the industry’s exports as well as sale of gem and jewellery to tourists and expatriates, a major forex earner have been subjected  to 18% VAT.

The Sri Lanka Gem and Jewellery Association (SLGJA) termed the move as “unprecedented” as the industry has always been GST/VAT exempted given the national importance in terms of earning much needed foreign exchange and employment.

Heading appaeals of the association,President Ranil Wickremesinghe unveiled plans to provide concessions to those who engaged in the gems and jewellery sector.

This initiative comes in response to the challenges faced by the industry, with the President emphasizing the importance of addressing these issues to support those involved in the field.

By offering solutions to the problems within the industry, relief will be extended to its stakeholders, ensuring their continued growth and prosperity.

The President clarified that immediate changes to the tax policy are not feasible. However, efforts will be made to devise an effective system to enhance the gem and jewellery industry.

The President directed officials to develop a viable system aimed at bolstering the gem and jewellery industry.

He instructed them to collaborate with both the public and private sectors to draft a proposal addressing these issues within two weeks.

President Ranil Wickremesinghe made this statement during a discussion held recently at the Presidential Secretariat’s with stakeholders from the gems and jewellery industry.

Formal gem and jewellery exports amounts to around $ 500 million whilst domestic sale to tourists and expatriates is estimated at $ 1 billion. The livelihood of over 600,000 persons and their families is dependent on the industry as well.

Despite overall negative performance, Sri Lanka’s export of gems, diamonds and jewellery in the first 10 months of 2023 grew by 16% to $ 440 million.

Total exports from Sri Lanka are down by 10%. Import of diamonds, precious stones and metals grew by 27% to $ 223 million.

In that context as well as at a time when consumer preference is shifting to colour precious gemstones from diamonds, the timing of bringing the gem and jewellery sector under VAT is ill-advised.SLGJA members said that 70% of the exports rely on imported precious rough stones for multiple commercial reasons such as customer preferences and colour, design and product quality. This is applicable to both lapidaries as well as local gem-studded jewellery manufacturers.

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