Paradox in Gold Import

In the recent petition submitted to the Government, the Vietnam Gold Traders Association (VGTA) expressed its concern about shortcomings and paradox of tax policies on present gold trading enterprises.

 

Mr. Dinh Nho Bang, Vice Chairman-cum-General Secretary of VGTA said, while there is no longer discrimination between gold bars and gold materials (gold grains), in Vietnam’s import tariff table there remains discrimination: the tax rate is 1 per cent on gold bars and 0.5 per cent on gold grains.

 

Vietnam’s enterprises have to import gold grains to avoid the tax rate of 1 per cent, resulting in a paradox that in response to Vietnam’s demand for gold materials, foreign manufactures have to process gold bars to turn them into gold materials in the form of grains. Adding to the cost of this process, the price of import gold grains is higher than gold bars’. Citing this fact, VGTA proposed to lower the import tariff on gold bars from 1 per cent to 0.5 per cent, the same level with current gold materials’.

 

The domestic gold price is often lower than the world’s, sometime VND400,000 per/tael lower than the world’s. However, Vietnam’s enterprises have as yet been unable to export gold because the tax rate of gold has not been regulated in the export tariff table.

 

VGTA said that there should be regulations on the export tariff rate on these goods to create a favourable legal framework for enterprises in case they are permitted to export gold and cause the domestic gold price to vary in conformity with that of other countries, which would help to minimise illegal gold smuggling and make our policies transparent. VGTA proposed that import and export tariff rates of gold should be on a level (0.5 per cent).

 

Although the Ministry of Finance has lowered import tariff on precious stones and diamonds to zero, enterprises have not imported such goods via official ways. “Importers must pay at once 10 per cent of VAT at border gates. Because of the great value of diamonds and precious stones, a selling price adding 10 per cent of VAT will be so much higher that consumers cannot afford it, forcing enterprises to buy goods floating on the market,” said Mr. Dinh Nho Bang.

 

VGTA proposed that the Prime Minister should require an authorised agency to develop a reasonable VAT policy on import diamonds and precious stones as on import gold. “The tax rate of zero per cent on export gold jewellery is reasonable. However, diamonds and precious stones on jewellery still have to suffer a tariff rate of 1 per cent”, Mr Bang said.

 

He held that this regulation not only discouraged enterprises manufacturing precious stones and jewellery for export to develop their business but also created difficulties for both enterprises and the tax department in tax calculation.

 

VGTA proposed to reduce export tariff rates on precious stones and manufactured diamonds on jewellery from 1 per cent to zero as on import gold jewellery. To gem stones, the proposed rate is to lower from 5 per cent to 3 per cent.

 

The petition was made after VGTA’s meeting with representatives from the Ministry of Finance, the General Department of Customs, the General Department of Taxation, the State Bank of Vietnam and some enterprises in late December 2005.

 

Mr. Hoang The Ngu, Chairman of VGTA said that Vietnam’s gold traders have to suffer fierce competition from regional countries and others in the world. To ease the pressure, it requires tax policy renewal to create good conditions for gold and gem stones trading enterprises to expand their operation, meeting domestic demand, promoting export and restricting the present illegal gold import.