Gold Miners Applaud VAT Relief but Urge Clear Legislation for 2024

Isaac kwesu

Miners have welcomed the zero-rating of gold supply to Fidelity Gold Refinery (FGR), noting that it alleviates operational burdens. However, they called for clearer legislation as the new statutory instrument (SI) 105 of 2024 does not backdate the zero-rating to January 1, 2024.

By Rudairo Mapuranga

Finance, Economic Development, and Investment Promotion Minister, Professor Mthuli Ncube, eliminated the 15 percent Value Added Tax (VAT) requirement for gold miners delivering to Fidelity Gold Refiners through SI 105 of 2024.

The new regulation states: “The principal regulations are amended by the insertion of a new schedule after the First Schedule as follows: Second Schedule (Section 13) Zero Rate: Supply of Gold to Fidelity Gold Refinery (Private) Limited.”

Earlier this year, the 15 per cent VAT on gold deliveries created significant cash flow challenges for miners.

Chamber of Mines of Zimbabwe (CoMZ) CEO Isaac Kwesu emphasized that removing VAT on gold deliveries to FGR reduces financial burdens and improves cash flow, enabling miners to expand their projects.

“The zero-rating of the supply of gold to Fidelity Gold Refinery is a welcome development and provides relief to gold producers. This zero-rating will improve the cash flow situation for gold producers and allow them to utilize the cash in expanding their projects. It also reduces complexity in tax administration and eliminates transaction costs and exchange rate losses that may arise when VAT is claimed in ZiG currency. Zero-rating gold sales is also in line with best practices, restoring confidence within the gold industry,” said Kwesu.

National Vice Chairman of Miners for Economic Development, Dru Edmund Kucherera, highlighted the strategic benefits of the policy shift.

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“This policy reduces operational burdens on miners and aligns with broader economic objectives, particularly enhancing foreign reserves. Gold is a crucial export for Zimbabwe, and by incentivizing more deliveries to Fidelity, the government aims to increase the flow of gold through formal channels, boosting reserve levels and strengthening the country’s balance of payments. With the new Zimbabwe Gold (ZiG) currency, substantial gold reserves are essential for its credibility. The VAT reversal supports the stability and acceptance of ZiG in the market. The timing is significant, considering high global gold prices, presenting an opportunity for Zimbabwe to maximize its foreign earnings from gold exports,” Kucherera said.

However, Kwesu noted that SI 105 of 2024 does not backdate the zero-rating to January 1, 2024, potentially requiring gold producers to pay VAT for that period. He urged the government to address this issue to remove uncertainty.

“To note, the new statutory instrument does not backdate the zero-rating to January 1, 2024, implying that for the period from January 1, 2024, to June 12, 2024, gold producers remain liable for VAT payments on gold supplied. We therefore appeal to the government to resolve and remove uncertainty around this matter,” Kwesu concluded.

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