An import levy of 15 percent on its value has been imposed on gold imports with effect from midnight April 17 the Finance Ministry said.
The import levy has been implemented to curb surging imports that have impacted the trade deficit and put pressure on the exchange rate, officials said. The finance ministry said the tax was reintroduced after a five-year hiatus as authorities detected a rapid spike in duty-free gold imports in recent months.
According to officials, the steep increase had not translated to a boon in jewellery manufacturing which has sparked suspicions that it was being smuggled to neighbouring India, the world's largest consumer of gold.
Sri Lanka's central bank warned in February that the sharp spike in gold imports was worsening the island nation's yawning trade deficit. The outflow of foreign exchange required to import gold at these volumes was also hurting Sri Lanka's foreign reserves, and in turn, depressing the currency.
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