Tax lift on gold export to hurt some firms

The tax lift on gold to 10% from 0% under Circular 184 is expected to hurt some firms, including Olympus Pacific Minerals Inc (OPM), the only foreign gold producer in Vietnam, and local gold-processing and exporters.

The tax lift on gold to 10% from 0% under Circular 184 is expected to hurt some firms, including Olympus Pacific Minerals Inc (OPM), the only foreign gold producer in Vietnam, and local gold-processing and exporters, the local newswire VnExpress reported.

Under the company’s investment licenses, 100% of OPM’s unprocessed gold will be exported in form of bars.

“Although Circular 184 would help stabilize local gold prices, it would directly affect on our business activities, which is irrelevant to domestic gold market, said James Hamilton, OPM’s Vice Principal of Investor Relations and Investment Department.

As investing $80million in Bong Mieu and Phuoc Son’s gold mines, the company committed to pay resource and corporate tax on the investment. Therefore, OPM would have to bear “double taxation” when the export tax of 20% on gold become effective.

Earlier, OPM was lured to invest in Vietnam due to a zero percent export tax on gold, the company revealed, adding that the surprise tax lift will likely freeze its business.

The Circular 184 also has a negative impact on domestic gold-processing firms and gold exporters. Latest figures showed that Vietnam net imported up to 71 tons of gold during the last 12 years, which are likely being held by the public.

“Once local firms’ export is restricted, their demand for buying gold would shrink, making many taels of gold would continue to be stuck in the public’s hands”., said Tran Trong Quoc Khanh, ACB gold-trading center’s Director.

However, local gold-trading firms would be hardly affected by the move, local media reported.

Phu Nhuan Jewelry, the biggest gold jewelry exporter in Vietnam said the company’s indifferent to the tax hike because the firm only exports gold jewelry of 8k (33% pure gold),14k(58.3%) and 18k(75%).

ACB gold-trading center is also free from the effect of Circular 184, as the company only export gold bar of 99.9% purity.

The Ministry of Finance on November 1 issued Circular 184, raising gold export tax to 10% from previous 0%, on god bars of under 99.9% purity, powdered gold or gold materials under Group 8718 ,effective from January 1, 2011. – Stoxplus.com

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