Bank of Tanzania Launches Domestic Gold a Purchase Program with Zero VAT

By Ruwaida Manji

In a strategic move to enhance the gold trade landscape, the Bank of Tanzania (BoT) has unveiled its Gold Purchase Program. This initiative is set to revolutionize the way gold sellers engage with the market, offering them a direct pathway to transact with the central bank. The program promises competitive international gold prices, streamlined transactions, and assured prompt payments, all within a framework that minimizes transaction costs. This effort is anchored in Section 59 of the Mining Act (CAP 123), reflecting the BoT’s commitment to boosting the efficiency and appeal of the gold trade in Tanzania.

Highlights

  • Competitive Pricing: Sellers benefit from international market rates.
  • Timely Payments: Full payments are guaranteed within 24 hours post-refinement.
  • Cost Efficiency: Refining costs are covered, and transaction fees are minimized.
  • Eligibility and Incentives: Reduced royalty and inspection fees, along with VAT exemptions, enhance profitability for sellers.

The Gold Purchase Program, effective from October 1, 2024, introduces a new pricing structure that aligns closely with international standards. Sellers receive TZS 232,876.89 per gram before deductions, with a reduced royalty of 4% (TZS 9,315.08). Notably, there is no inspection fee, making the total price per gram TZS 223,561.81. Prices will adjust daily to reflect global market dynamics, ensuring sellers always get the best available rates.

Key Aspects of the Gold Purchase Program:

  1. Daily Price Application: The program uses the daily international gold price as set by the Mining Commission, ensuring that sellers receive competitive market rates.
  2. Guaranteed Payments: The BoT commits to settling 100% of the payment within 24 hours of receiving the refining report.
  3. Coverage of Refining Costs: All refining costs associated with the sales are fully covered by the BoT, reducing overhead expenses for sellers.
  4. Eligibility and Requirements:
    1. Holders of mining licenses and large-scale mineral traders are mandated to sell 20% of their gold production to the Bank under this program.
    1. Additionally, gold refining industries are invited to participate, with the flexibility to sell any amount of gold to the BoT.
  5. Incentives and Benefits:
    1. A reduced royalty rate of 4% (down from the standard 6%).
    1. Waiver of the inspection fee (0%, compared to the standard 1%).
    1. VAT set at 0%, allowing sellers to claim, “input tax” and maximize returns.

The BoT assures sellers of a seamless transaction process. Payments are processed within 24 hours following the receipt of the refining report, providing sellers with financial certainty and liquidity. Additionally, by covering all refining costs, the BoT significantly reduces the overhead for sellers, enhancing their net profitability.

Participation in the program is open to mining license holders and large-scale mineral traders, who are required to sell 20% of their gold output to the BoT. Gold refining industries are also encouraged to participate, with the flexibility to sell any amount of gold, catering to their operational needs.

The program offers significant incentives: a reduced royalty rate, waived inspection fees, and a VAT set at 0%. This allows sellers to claim input tax, maximizing their returns and making the program highly attractive.

Gold Pricing and Fees (Effective from 1 October 2024)

  • Price per gram (before deductions): TZS 232,876.89
  • Royalty (4%): TZS 9,315.08
  • Inspection Fee: 0% (TZS 0)
  • Total per gram: TZS 223,561.81

Please note that prices fluctuate daily based on international market rates

The Bank of Tanzania’s Gold Purchase Program represents a forward-thinking approach to fostering a robust gold trading environment. By offering competitive prices, guaranteed payments, and reduced costs, the BoT is not only supporting the local gold market but also encouraging compliance with regulatory standards. Gold sellers and industry stakeholders stand to gain considerably from this initiative, making it a pivotal development in the Tanzanian gold trade sector. We commend the BoT for its innovative efforts to enhance the value of gold assets and streamline trading processes.

It is pertinent to say that, the BoT’s initiative aims to create a seamless, efficient pathway for gold sellers while ensuring compliance with local regulations. Gold sellers and industry stakeholders are encouraged to take advantage of this program to enhance the value of their gold assets and benefit from the BoT’s prompt payment guarantees.

Download here : https://www.bot.go.tz/Adverts/PressRelease/en/2024100206312713.pdf

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