19/06/2024
*Govt scraps VAT on gold deliveries*
Tapiwanashe Mangwiro-Senior Business Reporter
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.
Zero-rated goods are products that are exempt from value-added taxation (VAT). Countries designate products as zero-rated because they are leading contributors to other manufactured goods and a significant component of a broader supply chain.
Statutory Instrument 105 of 2024, gazetted on Wednesday effectively zero-rates gold deliveries to Fidelity.
SI 105 of 2024 reads “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.”
This follows a brief period earlier this year when the 15 percent VAT applied on gold deliveries by miners, which created significant cash flow challenges for small-scale miners.
The sector is critical to Zimbabwe’s gold production, accounting for roughly 60 percent of national output. Chamber of Mines of Zimbabwe chief executive chief executive officer, Isaac Kwesu, welcomed the change, noting that the VAT had complicated operations for many miners.
“With miners required to pay VAT of 15 percent to Zimra from money paid to them by Fidelity and to be refunded when the gold buyer remitted the payments, most small miners were left with no cashflows to fund operations,” Mr Kwesu said. This later saw the small miners being charged 16 percent overall as they also pay a 1 percent royalty. To stay with cashflows, some had resorted to side marketing of gold.”
The reintroduction of the zero rate is anticipated to bolster gold deliveries to Fidelity Gold Refiners.
Official figures show deliveries decreased by 2,4 percent from 11,45 tonnes in the first five months of 2023 to 11,2 tonnes in
