Friday Jan 23, 2026
Friday Jan 23, 2026
Friday, 23 January 2026 00:22 - - {{hitsCtrl.values.hits}}
NGJA Chairman and CEO Dr. S.B. Chaminda
The National Gem and Jewellery Authority (NGJA) has introduced a revised and significantly more concessional tax framework for gem imports in a bid to revive declining trade in gemstones, retain businesses within the country and support an ambitious export target of $ 1 billion in 2026.
Announcing the reforms at a media briefing on Monday, NGJA Chairman and Chief Executive Officer Dr. S.B. Chaminda said Sri Lanka aims to achieve $ 1 billion export revenue for this year.
He said the new method for calculating the Value Added Tax (VAT) and Social Security Contribution Levy (SSCL) on gem imports was designed to ease the tax burden on importers, following a sharp contraction in gem imports and exports after the levies were imposed from 1 January 2024.
“The introduction of VAT and SSCL on gem imports in 2024 had resulted in a significant decline in import volumes throughout 2024 and 2025 when compared with 2023, with spill over effects on exports as well,” he added.
Under the previous system, VAT at 18% and SSCL at 2.5% were calculated on the declared value of imported gem parcels, a method which Dr. Chaminda, described as excessively punitive for a sector dealing with high-value, but low-volume consignments.
“This imposed a heavy tax burden on importers and discouraged trading activity,” he said, adding that the contraction in imports had undermined Sri Lanka’s traditional role as a regional hub for gem cutting, polishing and re-export.
Following consultations with the Industries Ministry and the Finance Ministry, authorities have now moved to a simplified tax assessment model based on a deemed value linked to the weight of imported gemstones, rather than their market value.
“Under the revised system, precious gemstones such as rubies, sapphires and emeralds will be assigned a deemed value of $ 900 per kilogram, while semi-precious stones will be valued at $ 50 per kilogram for tax purposes,” he said.
The Chairman said the VAT and SSCL will be calculated on these fixed values, providing predictability and substantially lowering the effective tax payable by importers.
He explained that under the new system, a one-kilogram parcel of precious gemstones with a deemed value of $ 900 would attract a combined VAT and SSCL charge of $ 184.5, equivalent to around Rs. 57,195. For semi-precious stones, a one-kilogram parcel valued at $ 50 would incur just $ 10.25 in VAT and SSCL, or around Rs. 3,200.
Dr. Chaminda noted that prior to the introduction of VAT based on assessed value, Sri Lanka Customs had levied a flat clearance charge of $ 200 per parcel regardless of weight or value. However, once VAT was applied on assessed values, import volumes fell sharply, prompting concerns that the industry was losing competitiveness.
The revised framework also introduces a carat-based assessment for small consignments weighing less than one kilogram. “Precious stones such as rubies, sapphires and emeralds will be charged at a deemed value of $ 5 per carat, while semi-precious stones will be charged at $ 1 per carat. Under this structure, a one-carat precious stone would attract VAT and SSCL of around $ 1, while a one-carat semi-precious stone would be taxed on a deemed value of $ 0.20, translating to roughly Rs. 12 after taxes,” he explained.
Dr. Chaminda also disclosed that the previous tax regime had accelerated the migration of Sri Lanka’s gem trade to competing centres such as Thailand, Dubai and Hong Kong, where more liberalised and simplified tax systems are in place. “The new reforms are intended to reverse that trend and re-establish Sri Lanka as an attractive destination for gem trading and value addition,” he stressed.
Highlighting the broader economic impact, he said the revised tax structure would encourage greater participation by young entrepreneurs in gem importing, cutting, polishing and re-exporting, strengthening the domestic value chain. “With exports targeted at $ 1 billion in 2026, we expect the reforms to play a critical role in restoring confidence, increasing volumes and positioning Sri Lanka’s gem and jewellery sector for sustained growth,” he said.
He also noted that a proposal has been submitted to the Finance Ministry to consider only a 4% income tax from overseas remittances from gem sales. “This however is still at discussion level,” he added.
