Is Russia Cutting Its Export Duty On Gold?

Russia is mulling over the possibility of eliminating export duties on gold, as announced by the director of the finance ministry’s tax policy department on Tuesday.

According to the World Gold Council, Russia stood as the world’s second-largest gold miner in 2022, commanding approximately 9% of global production, trailing behind China and leading Australia. However, the specifics of Russian gold exports remain undisclosed.

The imposition of Western sanctions on Russia, primarily in response to its actions in Ukraine, has significantly impacted the country’s gold mining sector. Major players like Polyus, Russia’s largest gold producer, have found themselves under these sanctions.

Last June, several countries including Britain, Canada, Japan, and the United States, enacted bans on new imports of Russian gold, exacerbating the slowdown in Russian gold exports to the West. Consequently, Russian gold trade has shifted to nations untouched by sanctions, such as China, Turkey, and the United Arab Emirates.

The halt in Russian gold exports since the beginning of this year, attributed to new exchange-rate-linked duties, was confirmed by Danil Volkov, director of the finance ministry’s tax policy department, during his address to the Federation Council.

“This issue is being considered at the moment,” Volkov said.

Deputy Finance Minister Alexei Sazanov suggested that banks may have introduced discounts to facilitate the sale of gold to the public, possibly contributing to the cessation of exports.

Amidst this, Russia’s lower house of parliament recently approved a bill to raise the mineral extraction tax on gold between June and December 2024. The measure is expected to generate an additional 15 billion roubles ($159.69 million) for the budget by year-end.

Last year, Russia introduced exchange-rate-linked duties on various commodities, including gold, to bolster revenue amidst increased military spending and export expansions driven by a weakened rouble.

The export duty on gold, which may be scrapped as early as June 1, will coincide with the implementation of a new law introducing an additional coefficient to the mineral extraction tax, amounting to 78,000 rubles ($848.8) per kilogram, according to Deputy Finance Minister Alexey Moiseev.

President Vladimir Putin had previously signed the law to increase the mineral extraction tax for gold, effective from June 1 to December 31, 2024, reflecting the government’s commitment to adjusting fiscal policies in response to economic dynamics.

Information for this briefing was found via Mining.com, Azernews, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.