Russia's President Putin Cancels VAT on Gold and Other Precious Metals Investments
(Kitco News) - Russian President Vladimir Putin signed a law eliminating the value-added tax (VAT) on investments in gold and other precious metals.
The signed bill was reported by Russian media, citing the Official Internet Portal Of Legal Information.
The law makes banking operations involving precious metals (excluding coins), as well as investments into precious metals bank accounts, to be tax-free by eliminating the 20% VAT tax. The new law, however, does not mention anything about the 20% VAT on physical purchases of precious metals.
Russian newspaper Izvestia estimates that in the next five years the demand for precious metals like gold and silver could surge up to 50 tonnes a year, which is an increase of 15 times from current levels.
“Investments in gold will become one of the main ways of accumulating funds in the state treasury since the metal is protected from the U.S. dollar inflation,” the newspaper wrote.
Russia’s central bank, in the meantime, has continued its gold shopping spree this year with the latest purchase of 300,000 ounces of gold in July. The latest acquisition has brought Russia’s total gold reserves to 71.3 million ounces or 2,218 tons. The total value of the reserves now stands at $101.9 billion.
Gold now accounts for 19.6% of Russia's total reserves, the latest official figures revealed.
During the last decade, Russia's gold reserves have gone from 2% to 19% as of the end of 2018 Q4, according to the World Gold Council's (WGC) data.
This year alone, Russia bought a total of 3.4 million ounces or 96 tonnes of gold this year, adding substantial amounts each month. The country's central bank bought 600,000 ounces in June, 200,000 ounces in May, 550,000 ounces in April, 600,000 ounces in March, one million ounces in February, and 200,000 ounces in January.