Industry hails gold import tax removal

Ramani Kangaraarachchi

The removal of all taxes on gold imports will increase the demand for Sri Lankan jewellery in the international market and encourage industrialists. Sri Lanka Gem and Jewellery Association Vice Chairman A.P. Jeyarajah told the Daily News Business that export prices for Sri Lanka’s jewellery will be highly competitive in the international market in the future.

Jewellery exports Year Value 2008 Rs 2823.40 million 2009 Rs 1940.03 million

This is following the removal of all taxes imposed on gold imports by the Central Bank from March 1.

Gold is considered as a raw material in the international market. There were no taxes for imported gold earlier.

After introducing it in Sri Lanka for the first time in 2009 the jewellery prices went up.

Export earnings as well as local earnings dropped considerably.

He said jewellery manufacturers will be encouraged to manufacture innovative designs again.

He appreciated the action taken by the Export Development Board and the Gem and Jewellery Authority in removing these taxes.

“The Government charged one percent BTT and three percent Nation Building Tax on the import of gold and it had a huge impact on the industry,” Jeyarajah said.

Sri Lanka Gem and Jewellery Association has over 300 members and they export gold jewellery to USA, UK, Switzerland, Denmark and Canada.

Gem and Jewellery Authority Deputy Director General Ajith Perera said Sri Lanka exported jewellery worth Rs 2823.40 million in 2008.

It went down to Rs 1940.03 million last year. No one imported gold last year because of the taxes.

The price will come down again and those who were waiting to buy jewellery can get the benefit.

“The Gem and Jewellery Authority will take action to attract tourists and expatriates to purchase gold jewellery locally,” he said.

The price of a gold sovereign is around Rs 32,000 now.

It is expected to come down to about Rs 30,000.

Asked about the impact on pawning centres following the tax removal, Hatton National Bank Managing Director Rajendra Thyagarajah said there won’t be a huge impact on the banks because most of the pawned items have sentimental value.

“People like to redeem them whenever possible. The banks will pay a lesser amount for pawned items in the future,” he said.