N e w s

On Friday the State Duma ratified in the first reading the bill on exempting from the VAT the domestic diamond circulation and as well as diamond supplies to Russia. As reported by Kommersant, this will lead not only to a new splash activity in the cutting industry but also to the increase of the budget income, however strange it might sound. The authorities' hope is that there will be a 15-20% increase of the amount of diamonds cut in Russia with the price fall on diamonds inside the country. The total amount of taxes collected from the industry is expected to rise from $6 million to $7.5 million. The authorities plan to start taking in the VAT at the sales stage. As a result, home and foreign markets will be given equal right. The Deputy Finance Minister Mikhail Motorin, who presented the bill draft in the Duma, believes that this measure will provide a more complete usage of cutting plants capacity.

According to the Finance Ministry, today they could have been processing diamonds of total $800 million. However, the overall cost of diamonds that are being cut in Russia does exceed $520 million. 230 Duma deputies voted for VAT cancellation, 21 - against and 6 abstained from voting. They were not confused even by the Misistry's confession that this will bring to budget losses in the diamond mining regions. Thus, according to the Ministry estimations, Yakutia alone will lose $450 thousand which means that Federal budget indemnities will be necessary. The Federal budget, however, will still benefit in case VAT exemtion is imposed.

"Kommersant-Daily"