China Ends VAT Concession for Diamonds
November 19, 25
(IDEX Online) - China has ended concessions on diamond imports and is now charging 13 per cent VAT.
The move applies specifically to diamonds - both natural and lab grown - traded through the Shanghai Diamond Exchange (SDE), but since it is China's sole authorized platform for general-trade diamond imports and exports it will affect all diamonds
It means importers and traders now face higher upfront costs and cash flow pressure, as the full 13 per cent VAT must be paid at import and is only recoverable after sale.
Under a previous arrangement, the "levy-and-immediate-rebate" mechanism, importers paid 13 per cent, but immediately received a 9 per cent refund—leaving an effective 4 per cent burden.
The result is that consumers will pay higher prices, although the move will benefit domestic producers, who are no longer operating at a competitive disadvantage. The new VAT regime came into effect on 1 November.
It also covers rough diamonds which were previously zero-rated but which now attract the full 13 per cent VAT.
China, which was the world's second biggest market for diamonds, has been overtaken by India, and pushed into third place.