Sri Lanka's Cabinet approved a package of regulatory measures on 7 November 2025 to promote the gem industry, centred on how value-added tax is applied to imported rough gemstones.
An order under Section 6 of the Value Added Tax Act, published in Extraordinary Gazette No. 2461/43, allows VAT to be calculated based on the weight of imported genuine and semi-genuine gemstones rather than on declared parcel value. Revenue Security Order No. 04/2025 introduced matching customs sub-division codes. A related Ports and Airport Development Tax order preserved those codes for exemption continuity.
The shift addresses a practical failure mode. When tax follows invoice value, every parcel triggers a valuation argument at the border. High-value rough looks expensive to tax; under-declared rough invites enforcement action. Both outcomes slow clearance. Weight-based deemed values give importers a number before the shipment departs.
Cabinet spokesman Dr. Nalinda Jayatissa said the measures should streamline imports, simplify taxation, and reinforce Sri Lanka's position in the global gem market. Industry officials quoted in trade press described the earlier value-based system as a two-year choke point that redirected stones to competing hubs.
Implementation details were refined at the NGJA media briefing in January 2026, but the November gazette marks the political decision. For dealers abroad, the relevant question is whether Sri Lanka will maintain the weight-based regime long enough to rebuild buyer habits.
