The imposition of 18% VAT on the import of rough and finished gemstones – although they are primarily intended for re-export or to be value added and sold locally to visiting foreign visitors for foreign currency – has changed the dynamics of the industry to the detriment of its sustainability in Sri Lanka.

The SLGJA had previously warned that the imposition of 18% VAT would increase the risk of relocation to emerging competitor hubs like Dubai, India, Hong Kong and Thailand.

Each of these countries maintains single-digit VAT rates for their respective gem and jewellery industries. This disparity is now on the verge of rendering Sri Lanka’s gem and jewellery industry uncompetitive, with the livelihoods of over 600,000 employees in the formal sector being in jeopardy.