LookAtVietnam Bridge – Other countries are imposing 0% on gold imports, while Vietnam taxes 0.5%, which experts think a reasonable tax rate.
10-20% gold import tax increase proposed
The Vietnam Association of Financial Investors (VAFI) has suggested raising the import tax on gold by 10-20% in order to control the gold market after massive gold imports were said to be the main reason behind the dollar shortage.
However, the proposal has immediately faced strong opposition from experts and gold traders.
Dinh Nho Bang, Deputy Chairman of the Vietnam Gold Trading Association, said that Vietnam now can process just several tonnes of gold every year, while the gold available on the market is mainly sourced from imports. Currently, Vietnam imports 50-70 tonnes of gold every year, worth $6-7bil. Therefore, the big imports of gold have been considered the ‘culprit’ of the trade deficit.
Bang does not think that it is necessary to keep the import tax at lower levels in order to encourage imports through official channels. More importantly, he said, only reasonable tax rates can make sale prices reasonable, and accepted by the market. For example, the current gold price is VND17mil/tael, and if the tax rate is raised to 20%, the sale price would be VND20.5mil/tael, much higher than the world’s price levels.
In the past, Vietnam once taxed 3-5% on gold imports, which resulted in an increase of illegal imports of gold and illegal dollar bleeding through border gates, causing ups and downs in the market.
Bang said that other countries have the gold tax of 0%, while Vietnam taxes 0.5%, which explains why the domestic price is always higher than the world’s price.
The 0.5% tax rate is considered more reasonable than the 0% rate as it can help control foreign currency demand.
The proposal by VAFI to close gold trading floors also has not been applauded.
Luu Quang Dien, Director of SJC Hanoi, said that gold trading companies are safe and convenient for investors. Meanwhile, they help state management agencies more easily control the transaction volume, which serves as the basis for them to make suitable monetary policies.
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Gold demand increasing because of high inflation
Nguyen Minh Chau, Director of Bao Tin Minh Chau Gold and Silver Company, said that purchasing power has been very high so far this year. His workshops have been running at full capacity in order to meet the demand.
Chau is not sure that people are purchasing gold nowadays to hoard, but he believes that when prices keep rising, people tend to keep gold to protect their assets from devaluating.
Meanwhile, Dien from SJC Hanoi said that most gold transactions in the last time were purchase deals, while sales just accounted for 1/10 of total transactions.
In the latest news, the gold price unexpectedly bounced back this morning as 24-K gold was traded at VND17.42mil/tael, an increase of VND190,000/tael over the previous trading session.
The unexpected gold price increase on the world’s market was the main reason behind the domestic increase. In the world, gold with spot delivery is now $881.60/oz, up by $15.7/oz over the previous session. Investors and speculators have begun purchasing gold, believing that the downturn period has ended and a period of upswing has begun. |
(Source: NLD, LookAtVietnam) | 
