Israeli
authorities have lifted a major burden on the nation’s diamond trade: a tight
restriction on the amount of time dealers can spend inspecting goods without
paying a 0.1% import duty.
Diamond controller Danny Tal,
Israel’s regulator for the industry, will now allow companies up to 30 days to
examine stones tax-free before deciding whether to buy them, as long as the
goods are worth $50,000 or more. The new rule went into effect on May 1, and
will be in force until October 31, at which point officials will assess whether the
amendment has achieved its purpose, and whether to extend it. The change is
only relevant to companies that import polished, as Israel does not charge
import duty on rough diamonds.
The previous rule, which
allowed only three days for inspection, prevented Israeli companies from
properly examining diamonds prior to purchasing or returning them, the Israel
Diamond Exchange (IDE) explained. This limited the variety of goods that
sellers sent to the country. The extra time will help large companies with
factories abroad bring more goods to Israel for sorting before they ship them,
the bourse added.
More
time, wider reach
The
country will now gain greater access to diamonds from a wider range of
locations, IDE president Yoram Dvash predicted.
“In many cases, some
companies shipped goods straight to their branches around the world, rather
than inspecting the stones here in Israel,” Dvash wrote in a letter to members
of the exchange in April. “The time pressure imposed by the inspection period
and the tax on goods resulted in merchandise not reaching Israel.”
The arrival of a diamond at a
company will not count as an import until the trader in Israel decides to buy
the goods, Dvash explained. However, there are certain conditions under the new
arrangement. The tax-free period is only for inspection; authorities will
consider anyone who changes a stone’s character — such as its weight or value —
to have imported the item, and will therefore levy a charge. That includes
cutting, polishing, repairing and cleaning, Dvash continued.
“It’s important for all of us
to comply with every detail of the new decision so that it will go from being a
temporary measure to a fixed one,” he said.
Article from the Rapaport Magazine - May 2018. To subscribe click here.