COLOMBO, Jan. 20 -- Sri Lanka is revising the basis for charging value-added tax (VAT) on imported rough stones in a bid to revive its gem cutting and polishing industry, which has seen significant activity shift overseas following recent tax hikes, a senior official said.

The move follows industry concerns that the imposition of 18% VAT and a 2.5% Social Security Contribution Levy (SSCL) on imported rough stones severely undermined the local value-addition sector, prompting businesses to relocate operations to regional hubs such as Thailand, Dubai and Hong Kong.

"We saw the gem industry gradually moving out of Sri Lanka due to comparatively liberal and simplified tax regimes in other countries," Sri Lanka Gem and Jewellery Authority (S...