Gemfields, the main producer of responsibly sourced colored gems, has been caught off guard by reintroducing a 15% export responsibility on treasured gems in Zambia. This surprising transfer, efficient from 1 January 2025, considerably will increase the tax burden on the corporate’s Kagem Mining operation, a 75%-owned subsidiary.

The re-imposed export responsibility, coupled with the prevailing 6% mineral royalty tax, interprets to an efficient tax fee of 21% on Kagem’s revenues, excluding company tax. This compares unfavourably with the tax burdens emerald producers face in Brazil (2% mineral royalty) and Colombia (2.5% mixed mineral royalty and nationwide emerald fund contribution), the place combination tax on revenues is considerably decrease.

Before the reintroduction of the export responsibility, Kagem contributed 31% of its revenues to the Zambian authorities by means of mineral royalties, company tax, and dividends. This substantial contribution underscores the corporate’s vital financial affect on the nation.

The shock reintroduction of the export responsibility has raised issues inside Gemfields. The firm notes that there was no prior session with the business relating to this vital coverage change. Gemfields will now have interaction with the Zambian authorities to advocate for the re-suspension of the export responsibility or its full elimination, highlighting the potential unfavourable affect on the sustainability of the emerald sector and the attractiveness of Zambia as an funding vacation spot.

The firm has assured buyers that it’ll maintain the market knowledgeable of additional developments on this matter.

By: Nkosilathi Mudiyi