Govt. imposes 15% tax on gold imports

REUTERS: Sri Lanka imposed a 15 percent tax on imported gold with effect from yesterday to prevent illegal smuggling of the metal from the island nation, a Finance Ministry official said.

However, industry officials said the move will deter the export of the country’s popular and rare gems, diamonds and jewellery, which accounted for US $ 257.2 million in 2017.

The move comes a week after Sri Lanka’s Customs confiscated 24.2 kg of gold that was attempted to be smuggled from the Northern Province in fishing boats.

Finance Ministry Director Information Ali Hassen said the move was to prevent smuggling but gave no further details.

Customs data showed Rs.289 million worth gold was smuggled out through the main airport in 65 detected cases in 2017.

Industry officials, however, said the move will adversely impact the exports of the gem and jewellery sector.

“We won’t be able to compete in the international market and our competitiveness will be low with this tax,” an official at Sri Lanka Gem and Jewellery Association told Reuters.

“It will in fact result in more gold smuggling into the country. The government should also consider this.”

Sri Lanka imported 8,000 kg of gold in the first quarter of 2018. It imported 15,757 kg of gold in 2017, a 72 percent rise from a year earlier.

The Central Bank in January said increased gold imports caused an expansion in the trade deficit last year.