Sri Lanka plans gold refinery as high import taxes disrupt formal trade

Wednesday, 21 January 2026 00:20 - - {{hitsCtrl.values.hits}}

NGJA Chairman/CEO

Dr. S.P. Chaminda

National Gem and Jewellery Authority (NGJA) Chairman and Chief Executive Officer Dr. S.P. Chaminda announced that Sri Lanka is exploring the establishment of a domestic gold refinery to produce fine gold locally, as steep import taxes and restrictions continue to disrupt formal gold flows and push the trade underground.

Addressing the media on Monday he said the proposed refinery would allow Sri Lanka to import less refined gold, process it domestically and supply the refined output to local businessmen, the Central Bank, and export markets.

“We are in the process of discussing with a company. Discussions are ongoing from producing countries such as South Africa, whether the refinery should operate as a primary refinery, capable of processing raw gold, or as a secondary refinery focused on further refining partially processed material. However, we are hoping to conclude discussions within this year,” Dr. Chaminda added.

He said such a move could help reduce the need to import fully refined gold subject to high taxes, restore transparency to the gold trade, whilst supporting downstream industries, including gem and jewellery manufacturing and exports.

“We are looking into setting up a gold refinery in the country. We can then sell part of it to businesses, give some to the Central Bank and export the rest,” he said, noting that the current policy environment has made legal gold imports commercially unviable.

Sri Lanka was able to import gold freely till 2018, when a shift in macroeconomic policy and subsequent foreign exchange shortages led to sharp restrictions. In 2017, gold imports amounted to around $ 649 million. However, in 2018, import taxes on gold were significantly increased, and gold imports effectively came to a halt.

He said the subsequent depreciation of the rupee highlighted that currency instability was driven by broader monetary conditions rather than individual import items such as gold.

Under the current tax regime, import and related levies on gold exceed 45%, a level Dr. Chaminda described it as impractical for legitimate businesses.

“With import bans, the importation of gold came to a complete standstill. Now, with a very large tax of around 45% applied at current rates, businesses have consistently informed that they are finding it difficult to survive,” he said.

The Chairman also noted these taxes were imposed during the economic crisis and remain in place as part of Sri Lanka’s commitments under the International Monetary Fund (IMF) program.

“Although discussions have taken place on easing the tax burden, fiscal constraints and IMF program conditions have limited the Government’s ability to relax import duties at this stage,” he acknowledged.

As a result of import restrictions Dr. Chaminda admitted that gold is increasingly being smuggled into the country, depriving the State of revenue and exposing the sector to illicit activity.

He said the proposed gold refinery therefore is being examined as a structural solution to these challenges.

The Chairman noted a domestic refinery could strengthen Sri Lanka’s position as a regional hub for gold and jewellery, support value addition and help formalise supply chains that have weakened over recent years.