Taxing gold buyers is a tax-on-tax, say experts

Customers purchase gold rings at a jewellery store. — Photo cand.com.vn

HÀ NỘI — The view that it is necessary to tax gold purchases so that people ‘love’ gold less, according to experts, needs to be done in a calculated way, not to tax arbitrarily, to avoid a tax on tax.

Taxes are not the universal key

To reduce the attractiveness of gold, some experts recommend reconsidering taxing gold purchases. Associate Professor, Dr. Nguyễn Thị Mùi, a member of the National Financial and Monetary Policy Advisory Council, proposed that the State Bank of Vietnam should soon propose to the Ministry of Finance to develop tax policies for gold.

According to Mùi, the tax solution will contribute to reducing the demand for gold of certain investors, affecting consumer psychology and causing them to switch to other investment channels, thereby helping to control gold prices.

Tax is also a management tool to ensure fairness in production and business activities in general. Currently, the securities and real estate sectors are regulated by personal income tax, so it is also necessary to consider appropriate solutions for gold, according to Mùi.

However, a member of the Central Executive Committee of the Vietnam Federation of Accountants and Auditors and former Deputy Director of the finance ministry’s Tax Policy Department Nguyễn Văn Phụng said that the current tax policy on gold now is extremely clear. Consideration should be given when applying additional taxes to gold because taxes are not the universal key.

There are currently two main types of gold on the market, including foreign exchange gold managed by the State Bank of Vietnam and jewellery gold. For foreign exchange gold (imported exclusively by the State Bank to increase foreign exchange reserves), a zero per cent tax is applied because gold in this case is money.

As for gold jewellery – a conditional business – import tax is less than 3 per cent and value-added tax is applied like normal goods at 10 per cent.

Currently, gold businesses must pay value-added tax and corporate income tax.

“I think that this way of tax management is good, transparent and clear. For small business households, the level of predetermined revenue may still be problematic, not reflecting true revenue, but the tax industry is promoting the use of electronic invoices, through which data will be more accurate and tax collection will be more accurate,” Phụng said.

Taxing gold buyers is a tax-on-tax

The gold fever that has taken place since the beginning of the year has raised concerns about ‘goldenisation’ of the economy. To reduce people’s rush to hold physical gold, many experts suggest taxing gold transactions, just like taxing real estate transfers and securities transfers.

However, other experts say that the government should be cautious with this proposal.

According to Phụng, people own gold as a type of personal property. The habit of hoarding gold and buying gold as a dowry for weddings has become a habit of Vietnamese people. That is a legitimate need. For a long time, the act of selling gold to gold businesses and converting it into money has not been taxed.

Sharing a similar opinion, Phạm Xuân Hoè, former Deputy Director of the Institute of Banking Strategy, said that people buy gold to store with their income. They have worked and had to pay taxes many times.

“The current tax policy on gold is adequate. If we continue to tax the total value of people’s gold purchases – that is tax people’s personal assets – it means tax on tax,” said Mùi.

According to some experts, taxation – no matter any item – must have an economic basis, must come from production and business activities and cannot be taxed arbitrarily.

In fact, according to experts, the current tax policy on gold is relatively adequate. The long-standing problem with the gold market is tax evasion. Therefore, it is necessary to have strict management of the gold market by enhancing statistics and better tax collection.

For people to stop hoarding gold, experts suggested that the Government should have solutions to stabilise the macroeconomy, ensure the value of Vietnamese đồng and stimulate production and business development. So that cash flows into production, business and other investment channels, instead of flowing into gold. — VNS