South Korea has abolished a 26% Individual Consumption Tax on imported polished diamonds, following protracted interaction between the government and the Korean Diamond Exchange (KDE), WFDB has said in a statement. The move is expected to expand sales within the country according to WFDB President Ernie Blom.

KDE Chairman Nam Chang-Soo said that the tax regime has been simplified with the abolition of the ICT, which was imposed in 1976, and now polished diamond imports will attract only a 5% import tax and 10% Value Added Tax. "We hope that the abolition of the ICT and simplified taxes will have a very positive effect on diamond jewellery sales in South Korea. I believe that we will see a big increase in sales of polished diamonds and of diamond jewellery," he said.

Currently, as per KDE figures, annual sales of polished diamonds in South Korea amount to around US$ 2.5 billion, while diamond jewellery sales are around US$ 5 billion per year.

Bourse officials said that ICT restricted the domestic jewellery industry’s growth and competitiveness globally, and that will change now. The abolition of ICT has not only opened the door for members of the local jewellery industry, but also for foreign diamond manufacturers and dealers to establish a foothold in the market, they pointed out.

Chang-Soo added, “This amendment in tax structure will lead to increased tax revenue from higher official imports of diamonds and will curb underground business. This will also lead to the revitalization of the jewellery industry and finished diamond and precious stone-set jewellery with competitive prices for global markets.”

The KDE said it will work together with the WFDB, to build improved business practices and to show diamonds in a positive way to consumers in South Korea.

WFDB President Blom said: "It is always encouraging to see governments abolishing taxes, which only serve to restrict sales, and to make tax regimes simple and logical. I congratulate the KDE and its Chairman Nam Chang-Soo for their hard work and persistence over the past five years in putting the case to their government. The South Korean people love diamonds, and I believe this tax change will expand sales and encourage foreign companies to become involved in the world's eighth-largest economy. I encourage our bourse members around the world working under high taxation to approach their respective governments to work to bring down tax rates."