KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has submitted proposals to tax authorities for regularizing gold and jewellery sector.
In its proposals for budget 2020/2021, the KCCI said that gold and Jewelry sector has always been a neglected and largely unregulated sector.
No clear policy on import of Gold and precious metals has been formulated while also the export of finished Jewelry has no incentives.
There is a massive demand and consumption of gold, silver and gems in Pakistan and annual consumption of gold is estimated at 160.0 metric tons.
The chamber said that the demand is met mostly by undocumented sector because the foreign exchange is not provided by State Bank of Pakistan for import of gold.
Clause under Serial.No.16 of Part II of Import Policy Order 2016, which deals with import of Gold and Silver, stipulates the condition ‘Importable subject to the condition that importer shall arrange his own foreign exchange for the purpose’.
But there is no provision under the Foreign Exchange Rules which provides the necessary procedure to allow the importers to arrange own foreign exchange and remit the same to the supplier.
This has resulted in smuggling and undocumented trade in Gold, and a major sector which has immense potential for exports and revenue generation is suffering with rapid decline.
Thousands of goldsmiths, artisans and workers have lost their jobs. This sector has the capacity to produce high quality gold ornaments and designer jewelry for export.
The Karachi Chamber proposed that the sector can be a major employer and source of revenue if appropriate policy governing import of precious metals, documentation of sales and rational tax rates are implemented in consultation with stake holders.
Import of Gold and Silver may be allowed against payment in foreign exchange arranged by importers through local market (exchange companies and banks). Necessary legislation may be promulgated to legalize the jewelry trade.
It will help in curtailing smuggling of gold, silver and gems. Further, jewelry trade will be documented because if the import is legalized then the subsequent entities in supply chain will be documented.
Besides, this will unleash the potential of a large sector to contribute in growth, employment of highly skilled workers and export of Jewelry.