Tax exemption removal worries Lankan gem trade

Sri Lanka’s Gem and Jewellery industry is falling apart, accusing the government of neglect, not properly fostering the sector and removing a key tax concession in recent tax developments.
Industry officials, making the claim at a media briefing on Wednesday, said exports were in jeopardy due to the current practices and policies of the National Gem and Jewellery Authority (NGJA). Since 1979 the industry had a tax exemption on direct exports and foreign currency sales, but this tax exemption facility has been withdrawn in the new Inland Revenue Act.
To explain the impending crisis to the industry which could likely  result in a halt in gem mining in Sri Lanka, a media briefing was called jointly by the Sri Lanka Gem and Jewellery Association, the Lanka Gem Dealers and Miners Association and China Fort Gem and Jewellery Traders Association, Beruwela, Ratnapura in Colombo. This was after the associations held a hurried emergency meeting.
Associated at the briefing were A.H. M Imtizam, Chairman, Sri Lanka Gem and Jewellery Association; Punsiri Tennakoon, Chairman, Lanka Gem Dealers and Miners Association, Ratnapura and Akbar Cassim, Chairman, The China Fort Gem and Jewellery Traders Association, Beruwela.
They said that it is estimated that about 70 per cent of the gemstones exported out of Sri Lanka are in fact imported gemstones and due to the negative tax effects these supplies from overseas are falling significantly and the country’s exporters find it difficult to secure necessary supplies to do their businesses.  
They noted that though the NGJA was established to facilitate the development of exports, the current practices and policies of the NGJA are in fact one of the biggest impediments to the development of exports.  Due to these reasons the country’s export targets have significantly dropped to US$300 million whereas the annual export of a country like Hong Kong stands at $27 billion which does not mine a single gem stone and Thailand’s export was $13 billion.
The NGJA levies a percentage charge on the value of exports with the original intention being to utilize these funds to promote the industry. However the Authority is increasingly withdrawing the funds for promotional activities and using them to fund their expenses, the officials said. (QP)