Zim to remove tax on locally polished diamonds

Harare - Zimbabwe is considering removing tax royalties on locally cut and polished diamonds as part of government plans to add value to minerals and attract investment in the sector, the Minister of Mines Walter Chidhakwa said on Thursday.

The southern African country, which started its first diamond auction in December, has been selling rough diamonds but President Robert Mugabe's government is pushing companies to cut and polish them locally.

In January the government increased the tax on diamond royalties to 15% from 10%.

Chidhakwa told a diamond conference in Harare the government could also remove value added tax on diamonds that are processed locally. This will likely be announced in the 2015 budget set for later this month, Chidhakwa said.

"We are looking at the possibility of reducing or eliminating royalties for those diamonds that are destined for local cutting and polishing, including the removal of 15% VAT as part of efforts to improve the environment," said Chidhakwa.

More than 90% of Zimbabwe's diamonds are produced in Marange, in the east of the country, and sold mostly in Belgium and Dubai.

Data on diamond production is not readily available but the country sold 1.34 million carats during the first quarter of this year, according to ministry of mines figures.