The Thai government is considering abolishing the existing value added tax (VAT) on import of rough diamonds, gems and raw materials for jewellers in Thailand, reports say. By doing away with the tax, operating cots would reduce for the jewellers, and the industry would be leveraged to compete in global markets, the Thai government believes.

After seeing the first five months of 2009, generate gem and jewellery exports worth $4.8 billion (THB 165 billion), the government is looking forward to achieve a targeted gem and jewellery exports worth $8.8 billion (THB 300 billion) during the year.

So far, jewellers are paying the entire VAT upfront on all imported jewellery material, which includes those meant to produce end products for the export market. If the tax is eliminated, the Thai gem and jewellery sector would be a world gem and jewelry hub, and the approaching Bangkok Gems & Jewellery Fair in September 2009 would prove a good platform for the same. The proposal for abolishing VAT is expected to be presented to the cabinet in July.