April
2008
REPORT
 
Vol. 4 No.3  
 

Harsh tax regime promotes black market in jewels

High taxes and tough regulations are forcing pressure on retailers in the gold accessories sector, finds Corina Ilie
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Romania is encouraging the illegal import of all gold accessories, such as diamond rings, through a harsh tax regime and tough regulations which have seen 64 per cent of retailers hit with fines in one year.
In Romania, importing gold accessories entails a 15 per cent tax excise duty. All EU countries have dropped a similar excise duty, except for Latvia, where it is five per cent. 
This encourages consumers to choose to buy accessories on the black market, which last year accounted for 85 per cent of the entire sales of jewels.
“EU countries eliminated the excise tax because they realised that gold reserves contribute to the economic stability of a country,” says Mihail Pacioianu, first vice-president of Precious Metals and Precious and Semi-precious Stones Federation ‘Diamond Gold’. “If the excise tax was eliminated, half of Romania’s black market in gold accessories would disappear.”
Last year the excise was 25 per cent and the Government promised to reduce it gradually by 2010, when it will eventually be eliminated. By then, the state’s budget will have lost around 100 million Euro every year, argues the previous metals federation.
The two year gap also gives time for the black market to put its house in order and adapt to the new rules, once they come into play in 2010.

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