Vietnam Gold Traders Association (VGTA) has asked the Ministry of Finance to reduce the export tax on gold and gold jewelry to zero from current 10%, saying that the tax was resulting in growing trade deficit of the country.
The 10% tax rate has only been applied since January 1, when the ministry raised the tax from zero to help stabilize the domestic gold market.
In a proposal sent to the ministry early this week, the VGTA’s General Secretary Dinh Nho Bang said that, since all of the gold in Vietnam was imported, imposing a 10% export tax or limiting gold exports might exacerbate the trade deficit, encourage smuggling and increase the drain of U.S. dollars out of the country.
Bang said no country in the world now imposes such a high tax on the export of gold; so the high tax would lead to lower competitiveness of made-in-Vietnam jewelry and reducing jobs in the jewelry industry.
Under the Circular No. 184, the tax rate is imposed on gold of purity between 99% and 99.99% and gold jewelry of above 99%. Gold bars with purity of under 99.99% are also imposed with the tax rate.
Bang argued that Vietnam lacks equipment and technological expertise to assess purity beyond 99.9%, although the effect of the circular is simply to impose the tax on all unprocessed gold of purity greater than 99%.
Phu Nhuan Jewelry, Vietnam’s leading gold jewelry exporter, has said that it was indifferent to the tax hike because the firm only exported gold jewelry of 8 karats (33% purity), 14 karat (58.3%) and 18karat (75%).
Asia Commercial Bank’s gold trading center also said it was free from the effect of Circular No 184, as it only exported gold bars of 99.99% purity.
Gold fell by VND30,000-50,000 yesterday to VND35.5 million-VND35.59 million per tael.
Data from the State Bank of Vietnam, the country’s central bank, showed that Vietnam had imported a net volume of 71 tons of gold from 1998 through Sept this year.
Earlier, Olympus Pacific Minerals Inc of Canada, the only foreign gold producer in Vietnam, said it plans to withhold $100 million of new investment in Vietnam after the local government decided to raise gold export tariff to 10% from 0%. (VNS, VnEconomy)
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