Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube has scrapped the requirement for gold miners to pay 15 percent Value Added Tax (VAT) on the value of deliveries to Fidelity Gold Refiners, a move that has been welcomed by players in the industry.
The National Vice Chairman of Miners For Economic Development Cde Dru Edmund Kucherera says “The reversion to zero-rated VAT for gold deliveries is a strategic move by the government. This policy shift is not just about easing the operational burdens on miners but also aligns with broader economic goals, particularly the need to build up foreign reserves.
“Gold remains one of Zimbabwe’s key export commodities, and by encouraging increased deliveries to Fidelity, the government is ensuring that more gold enters formal channels. This not only improves our reserve levels but also strengthens our balance of payments position.
Additionally, with the introduction of the new Zimbabwe Gold (ZiG) currency, it is imperative to have substantial gold reserves backing this currency. The credibility of ZiG as a stable medium of exchange and store of value is heavily reliant on the robustness of our gold reserves.
“Therefore, facilitating smoother operations for miners through this VAT reversal indirectly supports the stability and acceptance of ZiG in the market,” he said.
The timing of this VAT reversal is particularly significant given the current high prices of gold on the international market. This provides an excellent opportunity for Zimbabwe to maximize its foreign earnings from gold exports.
By reducing the financial strain on miners, especially the small-scale operators who contribute substantially to the country’s total gold output, the Government is positioning itself to capitalise on the favourable global market conditions. Furthermore, boosting income through increased gold production and formal deliveries can have a ripple effect on the broader economy. Increased gold revenues can translate to higher tax revenues and royalties for the government, which can then be reinvested in critical sectors such as infrastructure, healthcare, and education.
The reversal of the VAT on gold deliveries seeks to alleviate immediate operational challenges for miners and secure long-term economic stability and growth for Zimbabwe.
Through fostering an environment that encourages formal gold deliveries, the government is taking steps to enhance its foreign reserves, support the new gold-backed currency, and boost national income during a period of high gold prices.