Minister of Mines Walter Chidhakwa said that this initiative has come up as part of government’s plans to add value to minerals and attract investment in the sector.
Since its first diamond auction in December, Zimbabwe has been selling rough diamonds. However, President Robert Mugabe’s government is insisting that companies need to cut and polish them locally.
Mail Online reports Zimbabwean President Robert Mugabe saying that the country’s diamond sector must shore up the economy, urging local gem cutting and polishing to add value.
"Diamonds should play a pivotal role in the economic development of our nation," Mugabe said at a Zimbabwe diamond conference in the capital Harare attended by international industry players.
"The diamond industry provides vast opportunities for growth."
In January, the tax on diamond royalties was increased by the government from 10% to 15%.
Reuters reports Chidhakwa as saying that government may likely announce the removal of value added tax on diamonds that are processed locally in its 2015 budget.
Chidhakwa said, "We are looking at the possibility of reducing or eliminating royalties for those diamonds that are destined for local cutting and polishing, including the removal of 15 percent VAT as part of efforts to improve the environment ."
Over 90% of Zimbabwe’s diamond production comes from Marange, in the east of the country. They are sold mostly in Belgium and Dubai.
According to ministry of mines figures, Zimbabwe sold 1.34million carats of diamonds during the first quarter of this year.
