VAT obstructs gold investment in Russia

David McHutchon | December 22, 2016 | Views: 464

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On 12-13 December the World Gold Council hosted a workshop in Moscow on “Global gold trends and the gold investment market in Russia”. The workshop brought together [about 60 representatives] of the gold industry, financial services sector and policy officials to discuss the gold investment market in Russia and how it can be strengthened.

Conference key takeaways

Removing VAT on gold bars is a measure perceived to be key to establishing a healthy and robust market for gold investment in Russia.

There was a broad industry consensus that removing VAT on gold bars would be beneficial for the gold industry and the economy as a whole. During two panel discussions and subsequent debates with the audience, stakeholders from across the sector – from the gold mining, refining and banking industries – pointed out that it would help diversify demand for gold in Russia, bring more investment into the gold mining sector, and give Russian savers and investors an opportunity to invest in Russian gold, rather than foreign currencies.

The removal of VAT on gold bars would also have beneficial effects for the federal budget, generating new sources of revenues for the government. A new research study by Ernst and Young shows that if implemented, the policy is estimated to contribute around 10 billion roubles to the government budget by raising additional revenues from capital gains and corporation tax.

Experts form the World Gold Council, the Singapore and London Bullion Market Associations provided context by explaining how other countries have developed their respective gold markets and what wider benefits this holds for investors and the economy as a whole. The current economic environment, both globally, and in Russia, as set out in the keynote speeches from the IMF and Sberbank, may highlight the role of gold as a strategic investment asset for savers and investors in Russia, as part of a balanced portfolio.

The World Gold Council will be publishing a White Paper on VAT on gold bars in the first quarter of 2017. The White Paper will summarise the findings of the workshop, results of the existing research, and experiences of other countries with making gold easily accessible to savers and investors.

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David McHutchon

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