The Russian government canceled the export tax on gold, based on a decree signed by Prime Minister Mikhail Mishustin. On June 1, a law introducing an additional coefficient to the mineral extraction tax (MET) on gold in the amount of 78,000 rubles ($848) per 1 kg will enter into force. According to Mikhail Gordiyenko, associate professor at the Department of Sustainable Development Finance at Plekhanov Russian University of Economics, this will help make the metal attractive to investors.
“The move could also have a major impact on gold investments. The increase in the mineral extraction tax reduces the margin for gold miners, which can reduce the interest of investors”, the expert believes. On the other hand, more stable income from gold mining through guaranteed tax deductions can make the industry more profitable for long-term investors looking for stability and predictability in market rules. Global think-tanks and rating agencies are also forecasting a steady rise in the price of the precious metal over the medium term, he added.
The removal of gold from the export tax at the exchange rate and the simultaneous increase in the mineral extraction tax are aimed at ensuring an influx of income into Russian coffers. The measure would bring additional budget revenues, regardless of the volume of gold exports or their quality, the expert explained. This will help bring in more predictable and stable revenue, which is extremely important in the face of sanctions, he said. According to the expert, the measure could generate additional revenues of 15 billion rubles ($162.3 million).
