According to the Russian Finance Ministry, there have been discussions on the elimination of value-added tax (VAT) on gold to return the capital worth billions in the country.

Currently, the tax VAT on gold is at 20 per cent, which is extremely high.

However, the finance ministry is weighing the decision as eliminating the VAT completely will help increase investment in gold instead of the banking system.

“You can see that the state pays much attention to the repatriation of capital. It turned out that a number of citizens would like to repatriate their capital but invest it not in the banking system but in gold bars. This is a personal right, but the VAT is now an obstacle for this,” said Deputy Finance Minister Alexey Moiseev.

Citizens who are buying gold are obligated to pay the VAT. Moiseev also recalled that Kazakhstan issued no tax on gold and the demand have grown so much.

Moiseev also added that eliminating the tax on gold can protect Russia from inflation. This is because there is an increase in the demand for precious metals in the country.

 “The issue is still being debated and now we have an additional reason to get to a decision. You can see that the government is paying a lot of attention to capital repatriation,” said Moiseev.

Russia’s central bank has been the top gold buyer out of all other countries, with over 2,036 tonnes of gold reserves purchased in the last four years.