Starting today (Saturday), a 10% tax will be imposed on the exports of gold and jewelry products that have at least 80% of gold content instead of the previous 99% figure amid the government’s effort to curb tax evasion.
Previously, the 10% tariff was applied to jewelry products with more than 99% of gold so a number of traders dodged the tax by reprocessing jewelry products to have gold content of less than 99%.
However, there are concerns the stricter policy would result in smuggling and declines in revenues.
This tariff hike could even cause gold exporters to mix other metals like silver and lead to lower gold content to below 80%. Meanwhile, silver and lead must be imported, thus this could have an impact on the country’s foreign currency holdings, a senior executive told Saigon Times.
The Vietnam Gold Traders Association also protested, saying the tax will negatively affect local traders especially those exporting fine gem-inlaid jewelry items with gold content between 80% and 99%.
These products do not contain pure gold and taxing them would result in losses for exporters, the Association warned.
VietnamNet reported that the export figures of precious stones and metals had reached 1.203 billion dollars by June 30, 2011. In June alone, the country exported 806.255 million dollars worth of the products, an increase of 133 percent over the previous month.
According to VietnamNet, gold export activities were most bustling in May and June, when the world’s prices were much higher than the domestic prices, which allowed Vietnamese enterprises to make a profit of two billion dongs for every ton of gold exported.
Yesterday, domestic gold price set a fresh all-time record at VND41.55 million a tael after its world counterpart skyrocketed to $1,667 an ounce.
It has marked a continuous upward trend for 2 consecutive days even when its international peer remained stable for a while.
The price surged VND300,000 a tael to VND41.4 million a tael after opening the morning session for one hour.
Moreover, further demand in the domestic market is showing signs of recovery, thus backing the rising trend.
World gold prices quickly set a new record of $1,681.9 an ounce, but then declining dramatically due to pressure on profit taking.