Will prices on jewellery grow 1,5 times?

Russian jewellery market might soon suffer from a lot of suites. Moscow arbitration court received suites from Central Excise Customs regarding Adamas and Yashma-Zoloto. Due to forbidden since 1 April 2008 tolling schemes, they have to make back dated payment for jewellery, made of own precious metals abroad, and then imported to Russia. Other 44 jewellery companies may be suited for the same tolling matter. According to experts, jewellers will transfer all expenditures to consumers. Price growth on jewellery is already 40%.

"Tolling a benefit for jewelers, because 20 % duties were only imposed on the cost of work and not on the cost of imported goods. Besides duties, companies also paid 18 % VAT. We thought that it was better to import precious metals abroad instead of developing manufacture in Russia", said Valery Radashevych, the General Director of Jewellers' Gild of Russia.

Federal Customs Service made a decision to check issued before licenses on export and processing of precious metals. On 1 April the licenses were revoked and declared null and void. Companies were also obliged to pay additional dues and taxes for imported goods.

Jewellers' Gild was shocked by this fact. Hence, companies having manufacture abroad, particularly in China and Turkey, are going through really hard times now.

"Cancellation of tolling structure is a great problem both for market and consumers. Russian jewellery factories are unable to produce goods of the same quality as western companies. At that demand for jewelleries is high: market growth amounts 50 % a year. Tolling structure was used for the benefit of consumers first of all: it was cheaper than importing from Poland, Turkey and China", says Denis Adamsky, the General Director of Moscow Jewellery Factory.

Companies, which used reduced duties before, are now transferring tax paymens on buyers, and prices on jewellery grew 30-40%. Of course, watchmakers selling jewellery in their shops (not speaking of jewellery watch sellers), will face the same problem.