Russia Introduces Gold Registration System

Russia will register purchases of gold and precious stones centrally from now on. To this end, President Putin has introduced a new law this week adopted. The Ministry of Finance wants to use this system to gain more insight into transactions of these valuable goods. This measure is not only intended to combat fraud and money laundering, it is also a prerequisite for opening up the domestic gold market. Jewellers and gold dealers will have to register all purchases and sales of gold in this new system. 

Russia decided last year to impose VAT of 20% on investment gold. scrape, with the aim of stimulating the private ownership of gold. This will make it much easier for individuals to buy and sell physical gold. Until recently, people had to rely on alternative investment instruments to gold, such as ETFs and futures. However, these do not offer the security of physical gold, which is less sensitive to economic and political sanctions.

Russia opens up the gold market to private individuals

According to the Russian financial newspaper Izvestia The domestic gold market in Russia can grow to 50 metric tons of gold on an annual basis within five years due to the removal of VAT. At the moment, only a few hundred thousand euros worth of investment gold is being traded, because it is not interesting to physically purchase the precious metal due to the high VAT. With the introduction of this new registration system, the opening of the Russian gold market is one step closer.

In the Eurozone, gold has been Exempt from VAT, but this is not yet the case in many other countries. By abolishing the tax on the purchase of the precious metal, the possession of gold as an alternative to savings is stimulated. The new registration system helps to map out the total cash flows in this sector.

This contribution was made from Geotrendlines