Ernie Blom
Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – South Africa needs a fair and logical diamond tax regime that is aligned with international standards, as well as a business environment that encourages local beneficiators to buy and produce quality diamonds.
Speaking at the yearly Diamond Indaba in Midrand, World Federation of Diamond Bourses president Ernie Blom said the South African Revenue Service was holding back an estimated R300-million of value-added tax from the local diamond industry.
“This is crippling our industry and taking working capital out of it,” he added.
He said it was greatly ironic that even though the diamond industry started in South Africa, which is the world’s fifth-largest diamond producer, the country had a diamond manufacturing industry that employed no more than 300 workers, while other countries such as Belgium, Israel and India sought to extract as much value as possible from the diamonds in which they dealt.
“Meanwhile, we are struggling to find an economic model that can justify diamond cutting and polishing at home,” he said.
Citing Belgium, he noted that a diamond regime tax system, called the carat tax, had been instituted. “Implementation of this new regime will put an end to complex discussions within the Antwerp diamond industry and tax on the control and evaluation of diamond stocks.
“This ensures that diamantaires enjoy greater tax predictability with a clear-cut and predictable fiscal regime that applies to diamond trading companies,” he added.
According to the Antwerp World Diamond Centre's website: "Under the carat tax, diamond traders will be able to monitor their total corporate taxes due throughout the year, as these taxes are based solely on the turnover generated by the sale of diamonds. This significantly increases simplicity, predictability, stability and clarity."