Sri Lanka gold sales fall after tax: dealers

July 10, 2013 (LBO) – Gold purchases from dealers in Sri Lanka slowed after a 10 percent tax was imposed, despite prices falling further, industry players said. On Tuesday a gold sovereign (about 8.1 grams) the most popular benchmark price was quoted around 40,500 rupees for a 22 carats and 44,000 rupees for a 24 carats, in the trade, after falling from highs of 54,000 in March, a dealer said.

At retail level sovereigns were quoted as much as 45,000 rupees per coin.

Last month a 22 carat sovereign was quoted around 47,000 rupees following a 10 percent tax imposed by the government on all gold imports.

According to a broker the maximum price 22 carats gold sovereign has reached is 62,000 rupees in previous year.

Tourists now find gold in Dubai and Malaysia more competitive, dealers said.

Gold dealers say the consumers are expecting a further drop in international gold prices which may have contributed to a fall in purchases.

The Sri Lankan government imposed the 10 percent tax to prevent smuggling of gold to the neighboring country India, which imposed a high tax on gold imports.

Indian economic restrictions on their citize