Gold Regulations & Taxation
While there is currently no set international standard for regulating gold, each mining country requires its mines to follow its own national or regional regulations for mining.
These mandatory conditions are usually adhered to alongside a set of voluntary codes of conduct which, while not a legal requirement, are designed to maintain standards within the mine and safeguard mine production. Codes of conduct, legislative requirements and mandatory conditions can vary wildly from country to country – there is also some discord between regulations at different mines owned by the same company.
Both exploration and mining activity itself is subject to local mining laws. These laws typically cover a range of aspects such as land ownership, licensing, environmental considerations, health and safety of miners and financial aspects such as tax and royalties.
There are international standards too which bring together more overarching regulations, legislations and agreements.
Environmental considerations will often play a major role in local mining law, with many setting regulations that incorporate responsible mining practices. To date, both the United States and the European Union have published responsible mining codes of conduct in a bid to ensure that any mining activity does not conflict with human rights. This is one example of international standards that may apply to multiple mines, located in different areas and controlled by different groups.
There are now many initiatives committed to conflict-free mining, such as the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict Affected and High Risk Areas, the ITRI Supply Chain Initiative, and Solutions for Hope.
Regulation of Market Infrastructure
It isn’t just the process of extraction or the operation of the mine that is subject to regulation and taxation. While the market infrastructure for buying and selling gold is not fully regulated, many component parts of the process are and serve as a framework for operation. Those working within the financial industry on behalf of investors, as well as bullion banks and exchanges, are often subject to local regulation.
The Financial Conduct Authority (FCA) is largely responsible for overseeing market infrastructure regulation in the UK. This covers exchanges (including the Precious Metals Exchange) and banks, along with financial industry advisors and portfolio managers. LBMA Gold Price, the international pricing benchmark, is also regulated by the FCA. However, it is unusual for online buying and selling platforms to be regulated in the UK.
Perhaps the most recognised of voluntary codes is the Good Delivery standard, which is set out by the London Bullion Market Association. This standard outlines best practices for ensuring high bar quality not only in the UK, but also on an international level. This standard is often considered alongside the Global Precious Metals Code published by the LBMA, which looks at gold integrity alongside that of other precious metals.
Throughout most stages of the gold mining life cycle, including the exploration and production stages, gold is subject to tax. It is also taxable upon import and export, and when being bought and sold. However, the exact taxable amount, along with any royalties, will vary depending on the tax and financial regulations of the country. In some countries, but not all, gold can actually be imported and exported freely.
While gold is typically subject to Capital Gains Tax, Value Added Tax (VAT) and Goods and Services Tax (GST) usually does not apply to investment gold, although this may vary depending on whether the investment is in coins or bars. This is not the case in every country, however, so it is important to check local regulations on gold taxation.
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