Sri Lanka’s gem and jewellery exporters up in arms against new taxes
Sri Lanka’s gem and jewellery industrialists called on the government to withdraw the 5 to 24 per cent tax imposed on their income under the new Inland Revenue Act (IRD) claiming that the current tax burden was unbearable for small scale direct and indirect exporters earning much needed foreign exchange for the country.
The industry which has the potential of bringing over US$I billion into the country would collapse as a result of the heavy tax burden imposed on them, Chairman of the Sri Lanka Gem and Jewellery Association, A.H.M. Imtizam told the Business Times on Wednesday.
He noted that the association has submitted an appeal to the President and the Finance Minister to provide some relief for them as the small gem exporters and licensed traders selling gems and jewelry to tourists will have to close down their business.
The withdrawal of tax exemption given to them since 1979 was highly unjustifiable; he said adding that 15 per cent tax on gold imports will be another blow against the industry.
It has also made Sri Lankan gem and jewellery exports less competitive in the international markets where the competition is very high with leading export countries such as Hong Kong and Thailand which have very liberalised policies on exports of value-added gems and jewelry.
He disclosed that the President has intervened in removing the excessive service charge of Rs.25,000 slapped by the National Gem and Jewellery Authority (NGJA) on gem and jewellery exports.
Likewise he expressed the belief that the President will direct the Finance Ministry to withdraw the income tax imposed on them.
Mr. Imtizam pointed out that smuggling of gold and grey market for gem jewellery had been boosted with the introduction of these taxes which had created a dearth in gold affecting local industrialists.
Granting licences to import gold tax free to a few individuals under a budget proposal made by former Finance Minister Ravi Karunanayake was one of the reasons for the increase in gold imports last year which has prompted the government to impose a 15 per cent tax, he alleged.
Local jewellery manufacturers who purchased gold from commercial banks will have to go after selected individual importers to buy their requirement paying a 5 per cent commission at present, another jewellery trader said pointing out they cannot expect fair-play from such gold traders.
The Commercial Bank and Bank of Ceylon are the highest gold importers among banks at present but under the 2018 budget proposal, banks have been told to levy 15 per cent from buyers of gold.