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Gold February 11, 2019 10:30:07 AM

Russia Seeks to Scrap VAT on Gold Purchases

Paul Ploumis
ScrapMonster Author
Russia’s Deputy Finance Minister Alexei Moiseev had called for speeding up the long-pending proposal to cut VAT on investments in gold in September last year.

Russia Seeks to Scrap VAT on Gold Purchases

SEATTLE (Scrap Monster): According to newspaper reports, the Russian Ministry of Finance has initiated steps to eliminate the value-added tax (VAT) on gold purchases. Currently, gold purchases in the country are charged with 20% tax.

The proposed elimination of tax will increase the Russian domestic gold demand by additional 50-100 tonnes, significantly higher when compared with the average annual demand of nearly three tonnes. Official figures published by the World Gold Council (WGC) suggest that annual gold demand in Russia totaled 2.8 tonnes in 2018, registering three-fold decline when compared to 2014.

There are several reasons which have prompted the Russian administration to think about abolition of tax on gold purchases. The primary reason is cited as the ever-increasing demand for precious metals in the country. The Ministry believes that gold purchase is an effective method to save and protect against inflation.

Russia’s Deputy Finance Minister Alexei Moiseev had called for speeding up the long-pending proposal to cut VAT on investments in gold in September last year. He had cited the after effects of a similar move in China and Kazakhstan, which recorded more than two-fold jump in gold demand after the abolition of VAT. The elimination of VAT will make gold more attractive for Russian businessmen who wish to repatriate dollar assets, Moiseev added.

Meantime, the elimination of tax is not expected to impact jewelry sales in the country, the newspaper report said.

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