Zimbabwe announces zero-rating of gold deliveries to Fidelity Gold Refineries

In a bid to stimulate gold sales, the government of Zimbabwe has announced the zero-rating of gold deliveries to Fidelity Gold Refineries, effective immediately.

This move follows complaints from gold producers regarding a 15% Value Added Tax (VAT) imposed by the Zimbabwe Revenue Authority (ZIMRA) earlier this year.

According to Statutory Instrument 105 of 2024, the Minister of Finance, Economic Development and Investment Promotion has amended the Value Added Tax (General) Regulations, 2003, to include a new section that exempts the supply of gold to Fidelity Gold Refinery (Private) Limited from VAT.

“IT is hereby notified that the Minister of Finance, Economic Development and Investment Promotion has, in terms of section 78 of the Value Added Tax Act [Chapter 23:12], made the following regulations: –

“1. These regulations may be cited as the Value Added Tax (General) (Amendment) Regulations, 2024 (No. 69).

“2. The Value Added Tax (General) Regulations, 2003, published in Statutory Instrument 273 of 2003 (hereinafter referred to as the principal regulations), are amended by the insertion of a new section 13 after section 12 as follows-

“Zero rating of specified goods and services 13. Subject to section 10 of the Act, the supply of any specified goods or services in respect of which the rate of zero per centum shall apply shall be as set in the Second Schedule,” read part of the notice.

The move is expected to boost gold deliveries to the refinery, which had seen a 5% decline in May compared to the same period last year.

Fidelity Gold Refinery reported that gold deliveries for May stood at 2,734kg, down from 2,876kg in May last year, but representing a 15% increase from the 2,387kg delivered in April this year.

Large-scale miners delivered 1,056kg of gold in May, a 1% decrease from the 1,070kg delivered in May last year and a 9.6% decrease from the 1,168kg delivered in April this year.

Smaller producers, who account for the majority of gold deliveries, sold 1,678kg in May, a 7% decrease from the 1,806kg delivered in May last year but a 38% increase from the 1,218kg delivered in April.

Despite rising global gold prices, Zimbabwean miners face increasing production costs, which may impact the country’s gold output. Zimbabwe aims to produce 40 tonnes of gold this year, up from the 30 tonnes produced in 2023.

The expected increase in gold production is expected to boost Zimbabwe’s foreign exchange earnings, as gold is a significant export commodity.

However, reduced gold output due to higher production costs may impact the amount of gold available to back Zimbabwe’s new currency, Zimbabwe Gold (ZiG), potentially weakening its value.

Decreased gold production may also lead to reduced foreign exchange earnings, impacting the country’s ability to import essential goods and services, potentially affecting the value of the currency.

The move is expected to boost gold deliveries to the refinery and increase Zimbabwe’s foreign exchange earnings.