The Government, through the Ministry of Finance, Economic Development and Investment Promotion, has scrapped the requirement for gold miners to pay a 15 per cent Value Added Tax (VAT) on the value of deliveries to Fidelity Gold Refiners.
Statutory Instrument 105 of 2024, gazetted on Wednesday effectively zero-rates gold deliveries to Fidelity. It reads in part:
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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.
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Earlier this year, the Treasury implemented a 15 per cent value-added tax (VAT) on gold deliveries by miners. Consequently, gold deliveries declined due to the tax, which posed significant cash flow challenges for small-scale miners.
Gold producers say the Zimbabwe Revenue Authority (ZIMRA) had started charging a 15% VAT backdated to 01 January 2024.
By zero-rating gold deliveries to Fidelity Gold Refineries, authorities hope to encourage more sales to the refinery.
Chamber of Mines of Zimbabwe chief executive officer, Isaac Kwesu, welcomed the change. He told <a href="https://www.herald.co.zw/govt-scraps-vat-on-gold-deliveries/">The Herald</a>:
<blockquote>
With miners required to pay VAT of 15 per cent 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.
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.
</blockquote>
Official figures show deliveries to the refinery decreased by 2,4 per cent from 11,45 tonnes in the first five months of 2023 to 11,2 tonnes in the same period in 2024.
Also speaking to The Herald, Prosper Chitambara, senior economist at the Labour and Economic Development Research Institute of Zimbabwe, said:
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The reversion to zero-rated VAT for gold deliveries is a strategic move by the government. This policy shift is not just about easing the operational burdens on miners but also aligns with broader economic goals, particularly the need to build up foreign reserves.
Gold remains one of Zimbabwe’s key export commodities, and by encouraging increased deliveries to Fidelity, the government is ensuring that more gold enters formal channels. This not only improves our reserve levels but also strengthens our balance of payments position.
Additionally, with the introduction of the new Zimbabwe Gold (ZiG) currency, it is imperative to have substantial gold reserves backing this currency.
The credibility of ZiG as a stable medium of exchange and store of value is heavily reliant on the robustness of our gold reserves.
Therefore, facilitating smoother operations for miners through this VAT reversal indirectly supports the stability and acceptance of ZiG in the market.
</blockquote>
 The government aims to achieve a target of 40 tonnes of gold deliveries to Fidelity Gold Refinery in 2024.
More: <a href="https://www.pindula.co.zw/">Pindula News</a>

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Government Scraps VAT On Gold Deliveries To Fidelity Gold Refiners

Gold deliveries to Fidelity Gold Refinery (FGR) fell 20% to 6.194 in the first quarter of 2023 from the same period in 2022 when deliveries were 7.694 tonnes.
This has been attributable to heavy rains which affected mining.
Speaking to <a href="https://businesstimes.co.zw/zims-gold-deliveries-plunge/">Business Times</a>, FGR general manager Peter Magaramombe said despite the plunge in gold deliveries in the first quarter of this year, there were some improvements in March. He said:
<blockquote>
Gold output has declined for the first quarter ended March 31 2023 to 6.194 tonnes from 7.694 tonnes during the comparable period last year due to heavy rains during the first two months of the year.
As you can see, gold deliveries increased to 2.4 tonnes in March 2023 from 1.89 tonnes in February this year.
Though deliveries are still in the negative compared to the same period, there were positive steps in the right direction in March.
</blockquote>
He said small-scale gold miners, who contributed over 60% of the total gold production, were especially affected by rains.
Large-scale producers delivered 2.762 tonnes while small-scale miners delivered 3.431 tonnes to FGR during the first quarter of 2023.
Gold is Zimbabwe’s largest export, and in 2020, the country sold US$2.14 billion worth of gold, ranking it 35th among the world’s gold exporters.
More: <a href="https://zero.pindula.co.zw/">Pindula News</a>

Gold Deliveries To Fidelity Fall

State-owned gold buyer, Fidelity Gold Refinery (FGR), has projected gold deliveries to reach 40 tonnes in 2023 mainly due to new gold mining projects coming into production.
FGR general manager Peter Magaramombe told the <a href="https://www.theindependent.co.zw/local-news/article/200006940/gold-deliveries-to-hit-40t">Independent</a> that the company received 35 tonnes of gold in 2022, an increase of 18.9% from the same period in 2021. He said:
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We have projected the gold deliveries in 2023 to reach 40 000 kg, an increase of 4 700 kg or 13.4% on 2022 gold deliveries.
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Magaramombe said additional gold buying centres will be opened in active regions. He added:
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FGR will continue to provide a competitive pricing framework benchmarked to the London Bullion Market Association (LBMA) prices at a discount of 5%.
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He also said the FGR will continue to offer United States dollar (USD) spot cash payments for gold lodgements.
This will be done to ensure that small-scale gold producers are not financially constrained.
Magaramombe said in 2021, gold miners delivered 29 664kg, increasing the deliveries in 2022 by 5 616kg with a total of 35 280kg delivered during the year. He said:
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The highest gold receipts were experienced during the third quarter of 2022 (9 680kg) and the fourth quarter (9 618kg).
This and the general surge in gold receipts could be attributed to several factors.
The accessibility of working areas (shafts) by small-scale miners as the water table lowers during the third and fourth quarters.
The incidence of maturing projects for large-scale mines having the effect of new additional gold receipts by FGR.
</blockquote>

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