Govt to cut diamonds tax

The government is set to review downwards the 15 percent sales tax on rough diamonds and to extend the tenure of diamond cutting and polishing licences as a way of promoting beneficiation as well as enhancing investor confidence in the sub-sector

The tax and non-tax measures are part of government efforts to ensure that the country derives maximum benefit from the vast diamond resource which is estimated to account for at least 25 percent of the global rough diamond supply.

The move is also a direct response to concerns raised by diamond cutting and polishing licence holders.

The Minister of Mines and Mining Development, Cde Walter Chidhakwa said the government is considering a downward review of the rough diamond sales tax from the current 15 percent in line with the country's objective of creating a vibrant diamond industry.

The 15 percent sales tax is levied on any firm that buys rough diamonds from local producers for the purpose of cutting and polishing.  

Minister Chidhakwa also highlighted that the obtaining US$100000 fee for a diamond cutting and polishing licence is uncompetitive, hence the need for a downward review.

Market analysts contend that the solution to unemployment problem lies in value addition and beneficiation strategies, especially in the diamond sub-sector.

According to the 2012 World Federation of Diamond Bourses Report, Chiadzwa diamonds have created 6000 jobs in Surat, which can be translated to US$125 million of salaries income lost annually to diamond cutters and polishers in India.‎