Gold exporters taxed twice on Govt new tariffs

The application of the new export tariffs on raw material gold may force gold exporters to be taxed twice, the Dau Tu Newspaper reported December 09.

According to Oficial Letter 184/2010/BTC of the Ministry of Finance, from January 01, 2011, gold export tax would be 10 percent for all types of raw material gold, gold jewellery, gold bars, gold bullion, yellow powder containing less than 99.99 percent, instead of the 0 percent previously.

“The above tax is equivalent to the gold export tarriff of a few other rare metals,” a finance ministry representative explained its proposal to raise tax and added that earlier, November 9, when domestic gold prices hit a record 38.5 million dong/tael, the proposed tax rate was 20 percent.

“When the new export tax bracket comes into effect, Vietnam will become one of the nations that have the highest tax bracket applied to the mineral sector in the world. With the current situation, I fear, there will be hardly any international investor making commitment to invest in Vietnam, if they have to consider so high resource and export tax, “said James Hamilton, vice president for external relations and investment of Olympus Pacific Minerals Inc. (Canadia-woned OYM – the only foreign business is investing more than $ 80 million in two gold mining Bong Mieu and Phuoc Son projects in central Quang Nam province) said.

Reportedly, OYM is subject to a resource tax rate of 15 percent, and if this company has to subject to the gold export tax rate of 10 percent, it will be taxed twice. “We want the government to maintain tariffs of 0 percent for unfinished gold goods, or approve entire exemption for new tax rates,” said the representative of OYM.

A representative of a gold trading company, said that as an usual, when the domestic gold price is lower than the world, many businesses try to export for profits. By the time the price is fever, they cited the shortage to push gold-listed prices higher many times more than the world. The above move of the finance ministry is explained to control the gold market, reduce scarcity, and prevent bypassing the laws to export 99.99 gold bars.

Currently, the export of 99.99 gold bars must be licensed by the State Bank. However, many businesses that are not allowed to export gold found ways to bypass the law by turning 99.99 gold into jewellery gold because this kind of export did not face any barriers when passing through the customs gates.

Hamilton said the export of large quantities of gold jewellery and gold-finished products, rather than raw gold, was a factor to reduce supply of the domestic market, push up demand of gold higher. However, the new circular of the Ministry of Finance does not regulate the application of the new export tax on gold this gold-finished product. Therefore, the export tax rates will not be able to regulate the demand for gold or reduce items in the gold status in Vietnam.

Hoang Van Hach, Office manager of Vietnam Gold Business Association also said that the high export taxes may cause the export of contraband, leaving local agencies to find it hard to manage the market and to reduce state budget revenues. “The tax to limit exports may continue to inhibit the amount of gold export, thereby increasing gold prices, reducing the foreign currency income which is necessary for the state budget,” Hoach added. – Dau tu

Tags: vietnam gold, Vietnam gold exports, Vietnam gold market