Russia scraps VAT on gold

Russian President Putin has signed a new law that will eliminate VAT on gold and other precious metals. This is evident from a New publication on a Russian government website. This will finally make it interesting for private individuals in Russia to buy gold.

With the introduction Under this new law, banks will also be able to offer gold-based investment products, without being hindered by a tax on the precious metal. It is not clear from the document whether the exemption from VAT also applies to purchases of physical Gold bars and Gold Coins.

'Russia good for 50 tonnes of gold a year'

According to estimates by the financial newspaper Izvestia the private gold market of Russia can develop rapidly. They expect demand for the precious metal to rise to 50 tonnes per year in the next five years. That is fifteen times as much as the current level. Until recently, a 20% tax was levied on the purchase of gold.

"Investing in gold will become one of the most important ways to preserve wealth, as it is protected against inflation from the US dollar", the newspaper writes.

In the Eurozone, gold has been exempt from VAT since 1999, but in many other countries this is not yet the case. By abolishing the tax on the purchase of the precious metal, the possession of gold as an alternative to savings is stimulated.

Russia's going for gold

The Russian central bank has already taken the lead in recent years by buy gold. Since 2006, the central bank has systematically increased its gold reserves from around 400 to 2,200 tonnes. In recent years, Russia has been the largest buyer of gold.

With this new law, individuals can also benefit from the advantages that gold offers within a well-diversified investment portfolio. The precious metal is known as a safe haven and has historically offered protection against currency depreciation.

Also Read: Russia wants to make gold tax-free?