Gold producers want proposed new tax scrapped
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The Vietnam Gold Traders Association has called on the government to scrap its plan to impose a 2-percent export tax, warning it could hurt the country’s competitiveness.
Vietnam already has low competitiveness compared to other countries and would cause official exports to fall and illegal exports to avoid the tax to surge, it said in a proposal to the Ministry of Finance.
The VGTA said companies are not allowed to import gold to produce jewelry, but has to source them domestically even though prices are often VND6-8 million ($264-352) per kilogram higher.
Countries like Thailand, Indonesia, Malaysia, and Singapore impose no import or export tax and have more advanced technology, it said.
They encourage jewelry exports, which are worth $10 billion for Thailand, $8 billion for Singapore, and $6 billion for Indonesia.
Vietnam’s exports were worth $2.6 billion last year.
There is currently no tax for jewelry with gold content under 95 percent, but the Ministry of Finance has proposed taxing all uniformly, saying customs officials have difficulty in determining gold purity.
Questions & Answers
Q.What is the primary concern of the Vietnam Gold Traders Association regarding the proposed export tax?
What is the primary concern of the Vietnam Gold Traders Association regarding the proposed export tax?
The VGTA is concerned the 2-percent export tax would harm Vietnam's competitiveness, cause official exports to decline, and lead to a surge in illegal gold exports as businesses try to avoid the new levy.
Q.What issues do gold producers in Vietnam currently face when sourcing materials for jewelry production?
What issues do gold producers in Vietnam currently face when sourcing materials for jewelry production?
Companies are not permitted to import gold, forcing them to source domestically. This often results in higher costs, with domestic gold prices being VND6-8 million ($264-352) per kilogram more expensive than international prices.
Q.How do Vietnam's gold export figures compare to those of other regional countries?
How do Vietnam's gold export figures compare to those of other regional countries?
Vietnam's gold exports were worth $2.6 billion last year. This is significantly lower than Thailand, which exported $10 billion, Singapore with $8 billion, and Indonesia with $6 billion in jewelry exports.
Q.Why has the Ministry of Finance suggested taxing all gold jewelry uniformly, regardless of purity?
Why has the Ministry of Finance suggested taxing all gold jewelry uniformly, regardless of purity?
The Ministry of Finance proposed uniform taxation because customs officials currently face difficulties in accurately determining the gold purity of jewelry. This new approach aims to simplify the assessment process for exports.
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