‘Gem and jewellery sector hit badly by new tax system’


By Hiran H.Senewiratne

The new tax system that is to be introduced in the 2018 budget for the gem and jewellery sector will impact the industry negatively, which brings more than US $ 750 million in exchange revenue annually into the country, a top gem exporter said.

" The new income tax under the IMF tax reform recommendations affects the local gem and jewellery sector which provides sizeable direct and indirect employment for the country, Managing Director, Zam Gems, Ahsan Refai told The Island Financial Review.

He said that when Singapore, Dubai and Hong Kong do not tax the gem and jewellery sector it is a pity that the Lankan government is imposing a tax on the sector in the 2018 budget, which has a great potential to reach US $ one billion in exchange revenue.

‘With the increase in tourism, the gem and jewellery sales are also increasing because high end tourists are interested in purchasing gem stones, he said.

'In the next five years Colombo will be a different city  and it would convert into a financial hub in the region with the Port City and other infrastructure sector developments. Therefore, demand for gem stones will increase with the influx of high end tourists into the country, he said . "The new tax system badly impacts the sector, Refai said.

The Zam Gem MD said that considerable value addition is happening in the gemstone sector and the demand for professionally skilled workers is high because such skilled persons go for foreign employment for higher salaries.

‘The government should give incentives and other support for the sector in order to reach US $ one billion export revenue. China is the biggest gemstone buyer in the world. Further, with the improvement of the Japanese economy the demand for gemstones is also increasing, he explained..

Refai said that Sri Lanka, to increase its export revenue should penetrate new markets, because those economies are also moving forward.

"We have won accolades not only in the country but also overseas because we sell good quality gems and in return buyers have a lot of trust and confidence in us, he said.

"Due to our proper business practices Zam Gems have won awards consecutively for four years at the The National Chamber of Exporters of Sri Lanka (NCE) with Gold awards in the Precious Stones and Jewellery section. - We won two years consecutively at the Sri Lanka China Business Co-operation (SLCBCC) Business Star Awards this year and last year. Dominant and a robust performance has placed the company at the pinnacle of foreign exchange earners, Refai said.

"Zam Gems has a 225 work force with 15 showrooms in the country, mainly based in five star hotels. Delivering outstanding sales value with a keen eye on services and quality coupled with hard work have brought these accolades to this gem establishment, Refai said.

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