New tax calculation method for gem imports: A strategic boost for jewellery industry

SRI Lanka’ globally renowned gem and jewellery industry has received a timely boost with the introduction of a revised tax calculation method for gem imports.

- By A.G.S. Swaminathan Sharma

The new framework for applying the Social Security Contribution Levy (SSCL) and Value Added Tax (VAT) is expected to ease the financial burden on importers, revive declining import volumes, and strengthen the country’s gem export performance.The announcement was made by National Gem and Jewellery Authority (NGJA) Chairman and Chief Executive Officer, Dr. S.B. Chaminda, at a recent media briefing in Colombo. He explained that the earlier tax regime introduced from 1 January 2024, had unintentionally slowed down gem imports and negatively impacted the broader industry.

From January 2024, gem imports were subjected to 18% VAT and 2.5% SSCL, calculated on the declared value of the imported gem parcels.

While the objective was to widen the tax base and enhance revenue, the outcome proved challenging for the gem trade. According to Dr. Chaminda, gem imports declined sharply during 2024 and 2025 compared to 2023, as the higher tax burden discouraged traders from importing raw stones. This decline was not confined to import volumes alone. Instead, it triggered a cascading effect across the entire gem and jewellery value chain, with serious economic, employment, and export consequences for Sri Lanka.

Reduced availability of raw gems for cutting and polishing

Sri Lanka’s gem industry depends heavily on the continuous inflow of raw stones—both locally mined and imported—for cutting, polishing, heat treatment, and jewellery manufacturing. When import volumes fell due to the high tax burden, lapidary centres and processing units faced shortages of raw material. This resulted in underutilisation of cutting and polishing facilites, idle machinery and workshops, reduced productivity among skilled gem cutters, and delays in fulfilling international orders. Since value addition is a core strength of Sri Lanka’s gem industry, any disruption in raw material supply directly weakens the country’s competitive advantage in global markets.