In an effort to bring transparency to gold trading activities, the General Department of Taxation (Ministry of Finance) has proposed that the State Bank research and submit to competent authorities regulations mandating cashless payments for gold transactions.
Specifically, the General Department of Taxation stated that in the past, the tax industry has implemented several solutions to promote the Prime Minister’s directive on controlling the issuance of electronic invoices in gold trading transactions. A notable solution is to review gold businesses that meet the requirements to implement the application of electronic invoices with codes created by the tax authority from cash registers.
According to the General Department of Taxation, since July 1, 2022, electronic invoices have been implemented nationwide for enterprises and business households. As a result, 100% of businesses operating in the gold and silver business sector have used electronic invoices.
General Department of Taxation proposes mandatory cashless payments for gold transactions
After more than a year of nationwide implementation, 53,425 businesses have applied for electronic invoices created by cash registers. Of these, 5,835 gold and silver businesses have applied and used over 1.065 million electronic invoices created by cash registers.
To further enhance coordination with agencies, sectors, and localities in tax administration for the gold business sector, in addition to the tax industry’s solutions, the General Department of Taxation proposed that the State Bank research and submit to competent authorities regulations mandating cashless payments for gold transactions, along with a control mechanism for these transactions.
Speaking to the Vietnam Industry and Trade Newspaper, Prof. Dr. Ngo Tri Long, an economic expert and former Deputy Director of the Market and Price Research Institute (Ministry of Finance), said that the proposal of the General Department of Taxation is very good and transparent. However, it is difficult to implement and has low feasibility because not all gold buyers are investors or buy in large quantities.
According to Mr. Long, currently, in Vietnam, people still have the habit of using cash in trading activities, so banning cash transactions for any transaction is impractical, including gold trading.
Prof. Dr. Ngo Tri Long, Economic Expert, Former Deputy Director of the Market and Price Research Institute (Ministry of Finance)
Moreover, “the current gold buyers in Vietnam are diverse, including many elderly people and rural residents who buy gold for storage in case of risks, or for gifts with small quantities from 0.5 to a few taels of gold. These buyers often do not understand technology and do not have smartphones for transaction settlement by transfer, so banning cash transactions is very difficult,” said Mr. Long.
According to the expert, this proposal is only suitable for those who buy gold for investment and in large quantities. Mr. Long also cited the current law on anti-money laundering, which requires transactions over VND 400 million to be reported to the State Bank. Therefore, if the competent authorities want to use this management measure, they need to implement many other synchronous solutions, such as specifying a specific limit for mandatory cashless payments.
“In my opinion, specifying cashless payments for gold transactions from VND 200 million and above will be feasible and suitable for the current context,” the expert said.
Similarly, an expert in the gold field also expressed concern that using administrative measures to force cashless payments in gold purchases and sales could give rise to a parallel market for cash gold payments, similar to the current USD market.
“The regulation banning cash payments in gold transactions will not solve the problem of the gold price gap between the domestic and world markets, nor will it solve the problem of raw material imports, but will instead aggravate these problems,” the expert said.
Besides the dissenting opinions, many experts also strongly support the option of banning cash payments in gold transactions. According to financial and banking expert Nguyen Tri Hieu, cashless payments should be applied to gold transactions as an effective measure to prevent money laundering.
According to Mr. Hieu, gold is one of the channels for laundering dirty money. Sources of income from tax evasion, embezzlement, and other illegal activities can all be laundered through the gold channel because of its high value and the fact that ownership does not need to be registered. Gold is bought with cash and then sold by transfer to legalize it.
Therefore, according to Mr. Hieu, when buying gold, it is necessary to make a transfer without waiting for a large value to make a cashless payment. “With the current trend of cashless payments, gold transactions should be made by transfer,” said Mr. Hieu.
Regarding the concern that the regulation banning cash payments in gold transactions will make this market sluggish, the expert said that this is not a big concern, although it will have an impact on gold traders because, up to now, gold traders have used a lot of cash to avoid tax authorities from grasping revenue and reducing tax payable.
Sharing the same view, Mr. Dinh Nho Bang, Vice Chairman and General Secretary of the Vietnam Gold Business Association, said that following the Government’s orientation towards a cashless society, gold is a special commodity with high value, so cashless payment is a must. Therefore, the proposal to ban cash payments for gold transactions does not have much impact on the gold market.
| Previously, when commenting on the amendment and supplement of Decree 24/2012 on gold market management, the State Bank – Ho Chi Minh City Branch also proposed to limit cash payment for gold bar trading to prevent risks and ensure compliance with legal provisions and anti-money laundering. |
