SLGJA expresses grave concern over VAT on gem and jewellery industry

The Sri Lanka Gem and Jewellery Association (SLGJA) has raised serious concerns about the government’s unprecedented decision to subject the industry to the Value Added Tax (VAT) regime. The SLGJA fears that such a move could lead to foreclosures and compel the private sector to relocate overseas or revert to the informal sector. The gem and jewellery industry has, until now, enjoyed exemption from GST/VAT and played a crucial role in contributing much-needed foreign exchange and employment to the country.

The gem and jewellery sector, a major foreign exchange earner, faces a potential crisis as formal exports reach approximately $500 million, with an additional $1 billion estimated from domestic sales to tourists and expatriates. Over 600,000 livelihoods are directly tied to the industry. Despite a general economic downturn, Sri Lanka experienced a 16% growth in gem, diamond, and jewellery exports in the first 10 months of 2023, amounting to $440 million. However, this positive trend stands in stark contrast to a 10% decline in total exports from the country, underscoring the industry’s significance.