VAT hits the gem industry
Sri Lanka’s exports of jewellery for the first quarter of this year dropped by 29 percent to Rs 243.3 million from Rs 358.5 million during the corresponding quarter of 2004. The Sri Lanka Gem and Jewellery Association (SLGJA) which makes up the industry, attributes this drop to the 15 percent VAT imposed on imports of gems into the island, effective from January 1.
Year 2004 was the best year for exports of gems and jewellery, netting in $129.9 million, 39 percent over that of the previous year. The number of lapidaries increased by 200 during 2004 and continued a 39 percent growth during the first quarter of this year. But, Sri Lanka’s expanding gem and jewellery industry has during the past decade run out of raw materials, being gemstones.
Only one percent of gemstones mined in Sri Lanka go into making the finished product.
In 2004, 500 gem dealers travelled to Madagascar to purchase gemstones and banks readily gave $15,000 in foreign exchange to a gem dealer per trip.
More: sundayobserver.lk