Miners applaud scrapping 15% VAT on gold deliveries
Wed June 26 2024
THE Government’s decision to remove the 15 percent Value Added Tax (VAT) on gold deliveries has provided significant relief to gold producers, who were previously concerned about the negative impact of the tax on business viability. Through Statutory Instrument 105 of 2024, the Government has exempted gold deliveries to Fidelity Gold Refinery from VAT, which is expected to motivate gold miners to contribute more towards national economic growth.The move has been applauded by the Business Economic Empowerment Federation (Beef), which commended the Government for taking bold steps to increase foreign reserves and reduce operating costs for miners.
According to Beef president, Dr Solomon Matsa, creating substantial gold reserves is crucial in supporting the Zimbabwe Gold (ZiG) currency. “This policy change is aimed at increasing foreign reserves and reducing operating costs for miners and we applaud the Government for taking that move,” he said. “This decision aligns with larger economic objectives and will have a positive impact on the mining sector. By promoting deliveries to Fidelity, the Government is ensuring that more gold is channelled through official channels, ultimately benefiting the economy.
“The strength of our gold reserves is crucial in determining the reputation of ZiG as a reliable store of value and medium of exchange. “The Second Republic can capitalise on the opportunity to increase revenue by alleviating financial pressure on mining companies. “This will lead to increased tax receipts and royalties, which can be channelled into vital industries such as tourism, infrastructure, healthcare and education.” By supporting the mining sector, Dr Matsa said the Government can create a win-win situation, boosting the economy while also strengthening the foundation of the ZiG currency.
The Reserve Bank of Zimbabwe introduced the new gold-backed currency on April 5, replacing the inflation-ravaged Zimbabwe dollar.ZiG joined a basket of currencies accepted as legal tender in Zimbabwe, with the US dollar currently dominating over 80 percent of all domestic transactions. Prominent businesswoman and Shurugwi miner, Dr Smelly Dube, said the Government should expect a surge in gold deliveries to Fidelity. “The Government’s decision to remove the 15 percent VAT on gold deliveries is a commendable move that is expected to have a positive impact on the gold mining sector,” she said. “This move is likely to boost confidence in the sector, enable the sector to reach its full potential in terms of growth, increase contribution to the country’s economic growth, support the development of the mining industry and enhance the sector’s ability to generate revenue and create jobs.” Dr Dube said it is a step in the right direction and is expected to have a positive ripple effect on the economy as a whole.Zimbabwe Miners Federation chief executive officer, Mr Wellington Takavarasha, also said the zero-rating of VAT on gold sales will boost deliveries, enabling Zimbabwe to achieve the 2024 gold delivery targets of at least 40 tonnes.
Source: https://www.chronicle.co.zw/