July 08, 2024 | 13:15 GMT+7

No new tax policy needed for gold market: experts

Ánh Tuyết -

At a livestreamed seminar on July 8, local experts noted that existing tax policies should be more effectively implemented for gold market management.

At a livestreamed seminar hosted by Vneconomy / Vietnam Economic Times on July 8, local experts noted that it is not necessary to promulgate a new tax policy but to implement more effectively existing ones  to better manage the gold market.

Mr. Nguyen Van Phung, member of the Executive Committee of the Vietnam Federation of Accountants and Auditors (VAA), former Director of the Tax Policy Department at the Ministry of Finance, held that it is wrong to consider tax as a skeleton key that can open all doors.

According to Mr. Phung, existing tax policies applying to gold production and trading are very clear. The question is how to implement such policies to fruitfully manage the gold market?

Regarding foreign exchange gold of which the State has a monopoly on import to make a gold reserve for the country, it is not subject to taxation, he explained. This kind of gold is also not subject to added value tax.

Regarding jewelry gold, the trading of gold is a conditional business. The gold import tax is low but the jewelry gold is subject to value added tax of 10% as a regular commodity.

Concerning tax management, household-run gold businesses are subject to both value added tax and corporate income tax.

The tax sector is promoting the use electronic invoices to connect buyers, sellers and tax agencies. Accordingly, tax agencies will have information and data to better manage and collect tax in line with regulations.

Regarding citizens, Mr. Phung said, they own gold as a personal asset. If citizens sell gold to gold trading firms, they are not subject to tax.

Sharing the viewpoint about tax on gold transactions, Mr. Pham Xuan Hoe, General Secretary of the Vietnam Financial Leasing Association, former Deputy Director of the Banking Strategy Institute, said people use their own incomes to buy gold for reserve. They themselves already pay for income taxes.

"Why should citizens be subject to tax if they want to buy gold for reserve? People buy gold for reserve as personal asset. Meanwhile, gold trading businesses pay 10% of VAT for the Government when they import gold materials for producing SJC gold bars,” he said.

Mr. Phung added that it is necessary to take measures to mitigate the risk of economic “goldernization” but taxation must be based on economic foundation and production and trade activities.

“Regardless of the policy implemented, the interests of 100 million people must always be considered. Policies should facilitate smooth business operations, encourage financial flows, and support economic stability, rather than introducing new taxes that may incentivize individuals to convert money into gold reserves. Such tax policies are fundamentally flawed,” he said.

Effective management needed to prevent money laundering and tax invasion

To manage the gold market effectively, Mr. Phung proposed adopting several measures driven by public demand.

“Over many years, I have observed that consumers, regardless of transaction size, consistently request invoices from gold shops. This practice serves as proof of purchase authenticity and enables future sales at competitive prices,” he said.

Current tax framework for business operations and gold trading is fairly comprehensive, he said. The key challenge lies in effective management to ensure fairness between sellers, buyers, and other stakeholders. Effective tax administration is crucial to prevent revenue losses, ensuring that situations where gold shops report taxes on only a fraction of their sales are avoided. This evasion of sales and income taxes reflects shortcomings in tax oversight and accountability due to inadequate management.

Current regulations mandate the use of electronic or integrated invoices to transmit data to tax authorities, and efforts are underway across tax agencies at all levels to implement these systems diligently.

Furthermore, effective management requires involvement from political institutions, as relying solely on tax authorities is insufficient, according to Mr. Phung. “While tax agencies are making major efforts, they face constraints in database access and institutional authority. Therefore, I advocate increased collaboration and data sharing between State management agencies to support tax authorities in monitoring and accurately recording transaction volumes in the gold market. Improved transaction management will enhance State budget revenues without the need for additional taxes”.

In addition to defining roles and ensuring reasonable budget incentives, effective tax management entails identifying transaction participants, how buyers transact, how sellers respond, and the quantities involved, he said. This data, contributing to a national shared database and other tools, will strengthen societal management and enhance efforts to combat money laundering.

The Government should create a favorable gold trading market to encourage people to get involved in gold trading rather than gold reserve, according to Mr. Phung.


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