Market NewsCommentConfusion over Botswana's first diamond sale

Confusion over Botswana's first diamond sale

Only two months before De Beers, the world's largest diamond supplier, begins selling its rough diamonds locally in Botswana in a joint venture with Government, there appears to be considerable confusion as to the actual mechanics of the process. A major issue confronting both De Beers and Government, according to industry sources, is that customers of the new DTC Botswana joint venture don't have the proper licenses to purchase the diamonds at the first April sale. In total 16 cutting licences have been granted to companies that set up manufacturing operations in Botswana to help a Government drive towards diversification of the diamond industry. Under DTC Botswana's policy the diamonds must be purchased, paid and manufactured locally. But as the first sale nears, it appears that no trading licences have been issued to companies enabling them to purchase the goods locally. This could have significant tax implications for all the cutting factories. It is understood that the current manufacturing licences are exempt from VAT, trading companies however are not. There are concerns that rough diamonds purchased by the local cutting entity will lead to even wider tax implications for the diamond companies involved. DTC Botswana said it is treating the issue as an urgent matter and is working closely with the Ministry to resolve the issue as soon as possible.

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