According to Sputnik, "India will soon be enacting regulations that will end the role of intermediaries in the import of rough diamonds from Russia." Sources from the Indian Ministry of Commerce told Sputnik that new regulations will relax the restrictive taxation and customs procedure which Indians had to adhere to when importing rough diamonds.
By Chaim Even-Zohar. Reprinted from Diamond Intelligence Briefs by special arrangement. Click here to read the first article.
By Chaim Even-Zohar. Reprinted from Diamond Intelligence Briefs by special arrangement. Read the second part of this article here.
Diamond industry analyst Avi Krawitz presents his rundown of the India International Jewellery Show (IIJS) that took place last week in Mumbai. While noting that IIJS is currently a niche domestic show focusing on gold jewelry - which saw steady business, with jewelers expecting demand to rise along with gold's upward trend - Krawitz sensed optimism about the diamond market even though domestic diamond consumption has slowed recently. "India’s jewelry industry has some hurdles to climb before the diamond trade can grow domestic supply [and demand - DL].
Israel's tax authority will be cracking down on unreported capital, after receiving a list from French authorities of more than 8,000 Israeli customers who held bank accounts at the Swiss arm of HSBC. Israeli newspapers reported that diamond company owners were on the list, along with bank owners and directors, real estate moguls, retired military officers, public and private company heads, well-known lawyers, artists, soccer players, sports agents, a retired judge and a former prosecutor.
With the abolition of the 6.5% export duty on rough diamonds fast approaching on September 1, writes Kommersant Daily, the Russian diamond cutting industry is asking the government to provide large-scale support to withstand competition on international markets - in particular from Indian diamond manufacturers.
With a view to attracting diamantaires from other centres across the world to process their diamonds in India, the Gems and Jewellery Export Promotion Council (GJEPC) wants the central government to implement a 'job work' policy like that which is implemented in China, providing tax exemptions for importers and exporters of diamonds, and is preparing a draft policy to this end. The claim is that China's policy is the reason why despite labour being 20% cheaper in India, diamantaires from different parts of the world prefer sending their goods to China for processing.
When it comes to buying luxury goods, including diamond jewelry, Chinese shoppers prefer to buy abroad rather than at home for simple reasons: they are cheaper overseas and the likelihood of them being just a good imitation is close to zero. But Premier Xi Jinping’s government wants to create a consumer-driven economy, with shoppers buying at home. To achieve this aim, writes Avi Krawitz in Rapaport, the administration raised taxes on jewelry and watches bought from online overseas websites. Meanwhile, such items bought at home come with sharp tariffs attached.
India’s Ministry of Finance has formed a sub-committee to, "look into issues related to the Imposition of Central Excise duty on jewellery", which is the 1 percent excise duty recently imposed on the jewelry industry.
Surat’s diamond sector is feeling more upbeat following the end of the national jewelers' strike and rising demand from China and the United States for polished goods. After picking up in January-February, trade again plummeted in March due to the nationwide jewelers' strike over a proposed new tax on gold that served to put a dent in domestic demand for diamonds, The Business Standard reported. Traders believe that a rise in domestic and international demand as well as the effect of the end of the strike will create a rise in business levels.
Reports from multiple sources are starting to detail the murky structures hiding the tremendous wealth accumulated by certain players in the diamond and gold trade that emerged through last week's release of the Panama Papers.
The Indian Express has written that one of the largest diamond trading firms in the world, Antwerp-based Rosy Blue, has been linked to at least 24 offshore companies in the Panama Papers, "and these are shown to have been registered in the tax havens of British Virgin Islands, Seychelles, Anguilla and Mauritius ... Most companies," the paper writes, "were registered by Harshad Ramniklal Mehta, with a capital of $50,000 each, between 2004 and 2008.
The Indian government on 30 March exempted from customs duty cut and polished diamonds imported by HRD Antwerp's Mumbai Diamond Institute for grading and re-export, taking the number of such entities enjoying the facility to four. In July last year, the Central Board of Excise and Customs (CBEC) had exempted from customs duties cut and polished diamonds imported for grading or certification and re-export by three laboratories and agencies.
The jewelers strike in India against the 1% excise duty on non-silver jewelery has entered its fourth week, despite claims from major trade bodies last week that they accepted the government’s assurance that there would be no raids and seizure of goods with the imposition of the tax, effectively ending the strike.
Gold and jewelry markets across India re-opened on Monday after traders ended an 18-day strike that resulted in losses of hundreds of millions of dollars in revenue for businesses and taxes for the government. The strike was aimed at pressuring the government to reverse a 1% excise duty imposed on gold and diamond jewelry in the 2016-17 budget. Although the government has not yet announced the withdrawal of the planned excise tax, which could make gold and diamond jewelry more expensive, it has decided to set up a task force led by an economic expert to look into it.
According to the Economic Times of India, the Indian government is now "likely" to introduce a favorable tax regime in the 2016 budget for the diamond industry in the Special Notified Zone (SNZ) in order to help develop India as a rough diamond trading hub and help small diamond traders. The gems and jewelry industry has suggested that the turnover tax on diamond trade in the SNZ should not be more than 0.25% and must be internationally competitive.
Britain’s Financial Conduct Authority (FCA) has decided not to take action against HSBC, Britain's largest bank, whose Swiss arm helped clients to evade tax. HSBC was hit by a scandal last year when leaked bank account details showed how its Swiss unit helped wealthy customers to evade taxes by concealing assets and handing out cash to avoid the authorities. HSBC’s private banking clients, which also featured 2,000 diamond industry names, held more than $100 billion.
IDEX India conducted a wide-ranging interview with Russell Mehta, vice chairman of the Gem and Jewelry Export Promotion Council (GJEPC), and CEO of Rosy Blue (India), about the current state of affairs in the Indian diamond industry. The single biggest challenge, according to Mehta, is the ‘ease of doing business’.
Quartz reports that, "In a bid to boost domestic spending and to kickstart its slowing economy, the Chinese government has revealed plans to cut import duties again, having previously slashed them back in May." As of January 1, China will again lower prices on some 800 consumer products including bags, clothes, scarves, and sunglasses.
The India Diamond Trading Centre (IDTC), the first such trading zone to be set up in the country to trade rough diamonds under special laws, in the Bharat Diamond Bourse (BDB) in Mumbai recently completed its first test shipment. The test shipment, from Rio Tinto has now been re-exported back to the mining firm.
Announced previously, Indian Prime Minister Narendra Modi has now officially launched three incentives to monetize gold that is lying idle and make it part of the banking system. The Gold Monetisation Scheme (GMS) 2015 will offer an option to resident Indians to deposit their precious metal and earn an interest of up to 2.5%, while under the Sovereign Gold Bond scheme, investors will be able to earn 2.75% interest per annum by buying paper gold.
The All India Gems and Jewellery Trade Federation (GJF) is asking the government to implement a 1 percent reduction in the Goods & Services Tax (GST) for the entire gems and jewelry sector. This would bring all jewelry manufacturers under one umbrella, and also help the gems and jewelry sector to promote the 'Make in India' concept.
Zimbabwe’s Treasury has so far received nearly $260 million in dividends over nine years from diamond companies operating in Marange in which it has shareholdings, according to comments made to the country's Parliament by Mines Minister Walter Chidhakwa. However, Finance Minister Patrick Chinamasa in April this year told a parliamentary committee that the Treasury has not received royalties — a levy based on production — from the diamond sector, especially Marange firms.
Signet Jewelers, the largest jewelry retailer in the United States, says it supports legislative moves to correct what bricks-and-mortar stores describe as unfairness in the tax system by not requiring online retailers to collect sales tax. The US Congress is still discussing the Marketplace Fairness Act. Currently, online sellers such as Amazon and eBay can avoid charging and collecting sales tax in states where they do not have a warehouse or another physical presence.
The newly elected Chairman of the Gem & Jewellery Export Promotion Council of India (GJEPC), Praveenshankar Pandya and Vice Chairman, Russell Mehta addressed a Press Conference on 20th Oct. and shared the strategy and policy recommendations of the new team to restore the health of the Indian gems and jewelry industry.
On October 5, the Organisation for Economic Cooperation and Development (OECD) released their long awaited Base Erosion and Profit Shifting (BEPS) outcomes report, containing the OECD’s proposals for new rules to combat tax evasion by multinationals, and transfer pricing in particular. It represents the first major corporate reform in a century, targeting offshore tax havens and the multinational companies that use them to avoid corporate tax, and aims to raise $250bn.
Surat Diamond Association President Dinesh Navadia is backing a request by the income tax authority that Surat diamantaires should pay their taxes in the city and not in Mumbai as a way of helping both the industry and the local population. Surat is India's and the world’s largest diamond cutting and polishing center. Most of the larger diamond firms in Mumbai have their manufacturing units in Surat but pay taxes in Mumbai where their offices are registered. Paying income tax in Surat will enable the city to receive more benefits under central government funding schemes.
An energy company executive has appeared in court in New York to face criminal charges that he diverted $18.5 million in company profits to a personal investment in an alleged conflict diamond mine Congolese. Gary Mole, the onetime owner of now-defunct Glacial Energy Holdings, pleaded not guilty to avoiding $740,000 in New York state taxes from 2005 to 2009. At different times, Mole classified the corporate cash as his own, listed the Générales des Mines au Congo mine as a consultant and backdated the “consulting agreement” with the mine, also known as Gemico, according to court papers.
Duty-free and travel-related retail sales in China could get a boost from government plans to change tax rules and build more retail venues, writes Bloomberg Intelligence analyst Catherine Lim. China's new airports and seaports, along with downtown duty-free shops may add selling space for luxury brands. Meanwhile, reforms of state-owned companies that control the country's duty-free shopping industry could draw foreign firms into partnerships, she wrote in a recent report.
The Gems and Jewellery Export Promotion Council (GJEPC) said senior members held wide ranging talks on issues of importance to the industry with Commerce Secretary Rita Teaotia during her visit to the IIJS earlier this month. The GJEPC delegation emphasized the role played by the industry and its contribution to the Indian economy in terms of foreign exchange earnings and employment.
Air travellers who are travelling outside the European Union are refusing to show their boarding passes at airport shops after The Independent revealed that the information is used by stores to avoid paying 20% VAT - as there is no purchase tax due on such goods - without passing on the discount to customers. The grassroots revolt comes amid mounting anger at the tax ruse - which was exposed on 8 August.
Commerce Secretary Rita Teotia said: “We moved quickly following the announcement by Prime Minister Narendra Modi last year to set up a Special Notified Zone (SNZ). The customs and Directorate General of Foreign Trade issued the necessary notification. But, some complex taxation issues remain, for which we will work with the industry, so that a reasonable outcome emerges and the SNZ can get operational at the earliest.”
While resource nationalism remains an issue in many African countries, several countries have returned their focus to investment attraction, changing their laws to encourage mining investment. This is particularly true in Zambia, which has made a u-turn decision on its initial mining tax regime announced earlier this year, which included increasing levies. Zambia is set to cut mineral royalties for underground mines to 6%, significantly less than the 9% previously proposed. However, the royalty will remain at 9% for open pit mines.
At a time when diamond exports have been falling, the government has decided to exempt cut and polished diamonds imported by three laboratories in India from customs duty.
While bricks and mortar stores may be losing out to their online rivals, there is one place that looks set for a retail boom – the airport.
The plunge in China’s stock market and concerns about its economic growth are having effects well beyond the nation’s borders -- with shares of Japanese companies that benefit from Chinese tourists also declining.
Tourism has boomed in Japan as the yen has weakened, with visitors from mainland China more than doubling in the first five months of this year. Chinese are the biggest spenders, according to a survey by the Japan Tourism Agency, spending big on everything from heated toilet seats to diamond rings.
The UAE is making headway in setting up a federal tax system to bolster government revenues, a senior Ministry of Finance official said on 2 July. The drafting of laws for introducing corporate tax and value-added tax (VAT) is expected to complete in the third quarter of this year.
To check offshore tax evasion, India and the US today signed an agreement to implement the Foreign Account Tax Compliance Act (FATCA) that will facilitate exchange of information between the two countries from October 1. "FATCA is a mutual effort to combat tax evasion and it would be mutually beneficial for both the countries... FATCA would detect, discourage offshore tax evasion. This kind of exchange of information is top priority for governments", said US Ambassador Richard Verma. US law FATCA seeks to facilitate flow of financial information between countries.
Jewelers of America (JA), the national trade association for businesses serving the fine jewelry marketplace, welcomes congressman Jason Chaffetz’s introduction in the U.S. House of Representatives of the Remote Transactions Parity Act (RTPA) and supports bipartisan efforts to pass e-fairness legislation. JA has led the fight for sales tax fairness in the jewelry industry.
The Indian Consulate in Dubai has urged expats to follow due procedure and get export certificates before exiting U.A.E. "Indian expats can easily travel in and out of India with gold jewellery if they follow due procedure", the Indian Consulate in Dubai has clarified. In recent months, Indian expats have been complaining about ‘harassment’ by customs officials at Indian airports who force them to pay heavy duties or to leave jewellery behind in lockers.