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Zimbabwe govt scraps VAT on gold deliveries

by Staff reporter
14 Jun 2024 at 07:05hrs | Views
Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, has abolished the 15 percent Value Added Tax (VAT) on gold deliveries to Fidelity Gold Refiners, as stipulated in Statutory Instrument 105 of 2024. This measure zero-rates gold deliveries, relieving miners, particularly small-scale ones, from significant cash flow issues that arose when the VAT was briefly applied earlier this year.

The gold sector, crucial to Zimbabwe's economy, produces around 60 percent of the nation's gold output. Chamber of Mines CEO, Isaac Kwesu, highlighted that the VAT burden left small miners with insufficient cash flow, leading some to side market their gold. The zero-rating is expected to enhance gold deliveries to Fidelity, with a noted decrease in deliveries by 2.4 percent from 2023 to 2024.

Senior economist Dr. Prosper Chitambara supports the VAT reversal, emphasizing its alignment with Zimbabwe's economic goals, particularly in building foreign reserves and supporting the new Zimbabwe Gold (ZiG) currency. Financial analyst Gladys Shumbambiri-Mutsopotsi also lauded the timing, given high international gold prices, as it maximizes foreign earnings and supports the broader economy.

Overall, the VAT reversal is aimed at easing miners' operational challenges and securing long-term economic stability by boosting formal gold deliveries, enhancing foreign reserves, and capitalizing on favorable global gold prices.

Source - The Herald