[2020-03-02] New model for the sale of diamonds in Angola allows an increase in tax revenue

Source: Macauhub

The amendment introduced in the model of marketing the sale of diamonds in Angola has allowed tax revenues obtained in the last two years to increase by 41.6%, said Angola’s national diamond sales company, Sodiam.

The Angolan state company also said that the introduction of the new model also drove an average annual increase of 8.5% in gross revenues from the sale of diamonds, against an average growth of 2.3% in 2016/2017.

The ongoing reforms, approved by Presidential Decree 175/18 of 18 July 2018, had the effect of not only an exponential growth of tax revenues from the sale of the precious stones but also, “brought competition and transparency to the sector, which was hitherto non-existent,” said the statement released on Saturday in Luanda.

The previous model of selling diamonds, in place from 2012 to 2016, was based on the concept of the so-called “preferred customer” and on a pre-authorized and pre-ordered direct sales procedure.

Within this model the previous president, on a yearly basis, approved a list of businesses with preferred customer status and the percentage of production that these customers could buy.

These preferred customers, the statement added, enjoyed exclusive access to the market, and were the only ones who could buy diamonds from Sodiam, at preferential prices, with a discount on the market value of the diamonds that they purchased.

The finding that this model was “severely prejudicial” for the State’s finances, led the current government in 2018 to approve the Policy on the Sale of Diamonds, which is now in force.

In the new model, the base reference price for sale is previously set, by agreement among the main players involved in the process. These include the producer, Sodiam and the independent valuer, and the transaction is only carried out by the buyer if their offer matches or is higher than the established reference price.

As a result of these new measures, the diamond sales system has seen “a number of improvement and positive changes,” and over 120 companies are now registered in the Sodiam customer portfolio.

Three new diamond cutting and polishing factories have been opened and, in May 2019, 12 purchase two-year contracts were signed, including the four cutting factories, which will be in place until the end of the first half of 2021.