World Federation of Diamond Bourses (WFDB) President Ernie Blom has praised the work of the WFDB-affiliated Korea Diamond Exchange (KDE) in persuading the government to abolish a 26 percent individual consumption tax on imported polished diamonds, that dates back to 1976.
The South Korean government abolished the tax in December, following five years of talks and intensive work by the KDE, said bourse Chairman Nam Chang Soo. He said, “Now, South Korean diamond importers will have a simplified tax regime — a 5 percent import tax and 10 percent Value Added Tax.” We hope that the abolition of the ICT and simplified taxes will have a very positive effect on diamond jewellery sales in South Korea.”
He added, “I believe that we will see a big increase in sales of polished diamonds and of diamond jewellery.Annual sales of polished diamonds in South Korea amount to around $2.5 billion, while diamond jewellery sales are in the order of $5 billion per year.”
He went on to say, “Together with the WFDB, we aim to build improved business practices and to show diamonds in a positive way to consumers in South Korea. The ICT restricted the domestic jewellery industry’s growth and competitiveness globally. The abolition of the ICT will boost the growth of the jewellery industry locally and worldwide. It has not only opened the door for members of the local jewellery industry, but also for foreign diamond manufacturers and dealers to establish a foothold in the market.”
Nam concluded, “I am also confident that this amendment in tax structure will lead to increased tax revenue from higher official imports of diamonds and will curb underground business. This will also lead to the revitalisation of the jewellery industry and finished diamond and precious stone-set jewellery with competitive prices for global markets. I believe this will also will lead to increased consumption of loose diamonds in the country and create higher demand for diamonds in the country."
Blom commented, "It is always encouraging to see governments abolishing taxes, which only serve to restrict sales, and to make tax regimes simple and logical. I congratulate the KDE and its Chairman Nam Chang Soo for their hard work and persistence over the past five years in putting the case to their government. The South Korean people love diamonds, and I believe this tax change will expand sales and encourage foreign companies to become involved in the world's eighth-largest economy.”
He added, “I encourage our bourse members around the world working under high taxation to approach their respective governments to work to bring down tax rates."