TVRS to increase Sri Lanka’s gem and jewelry export earnings
The Morning: Sri Lanka’s newly launched Tourist Value Added Tax Refund Scheme (TVRS) is expected to increase gem and jewellery purchases by tourists, making Sri Lanka more competitive as a destination jewellery market after VAT imposed on goods due to the IMF programme, Gem and Jewellery Authority Chairperson Naveen Sooriyarachchi said.
“Following the IMF negotiations, the following taxes were imposed on the gem and jewellery industry, commencing on 1st January 2024; (1) 18% VAT on gem and jewellery sales in foreign currency to tourists, (2) 18% VAT on imports of rough and finished gems, and (3) taxes totalling to 45.14% on imports of gold,” Sooriyarachchi told media on Monday (7).
“As a result, the gem and jewellery exports drastically declined by 25% from $ 477 million in 2023 to $ 360 million in 2024. The drop in foreign exchange inflows in 2024 was Rs. 170 million or Rs. 35 billion.”
“There are nearly 8,000 operating mines in the country. Assuming that 50% of these mines are operating at a break-even level, they should be producing gems worth more than $ 1.5 billion per year.”
In 2024 Sri Lanka’s tea exports saw $ 1.4 billion in earnings.
Sooriyaarachchi said that if gem production were to be converted into official exports, the gem and jewellery sector has the potential to become the second-largest export-earning industry in the country.
Sri Lanka’s gem and jewellery industry earned $ 360 million in export earnings in 2024, which is roughly 24% of the total projected earnings stated by Sooriyaarachchi.
OSL take:
Sri Lanka’s gem and jewelry industry has the potential of becoming one of the leading revenue generators to the country. Local authorities have understood this fact and are now engaged in further uplifting and developing the industry while also promoting Sri Lankan gems and jewelry in foreign markets. Given the increasing interest in Sri Lanka’s gem and jewelry in foreign markets, Sri Lankan authorities have also set impressive revenue targets for the country from the industry. The many trade agreements and trade concessions enjoyed by Sri Lanka with many foreign countries have also helped boost local gems and jewelry in foreign markets. All these developments have expanded the business/investment opportunities in Sri Lanka’s gem and jewelry industry. Given the high-quality gems found in Sri Lanka, especially given that Gems of Ceylon have made their way to many European Royal households in the past, businesses/investments in Sri Lanka’s gem and jewellery industry would be a definite revenue generator. Also, businesses in the gem and jewelery industry could also be expanded to the country’s tourism industry opening up more business/investment opportunities. All these factors are indicative of the growth and business potential in Sri Lanka’s gem and jewelry industry.
| Article Code : | VBS/AT/20250711/Z_2 |