The gold market has cooled down after the State Bank started selling SJC gold bars directly to the people at a “stabilized” price. However, according to experts, this is still considered a temporary solution, and in the long run, transaction tax collection should be considered to curb speculation, hoarding, and market manipulation. At the same time, it creates fairness with other investment channels.
Equality among investment channels
According to Assoc. Prof. Dr. Nguyen Thi Mui, a member of the Monetary and Financial Policy Advisory Council, recently, gold has been considered an investment channel for profit-making, so it is necessary to consider a reasonable tax rate. This will not only bring equality among investment channels but also help stabilize gold prices.
On the other hand, the tax policy for the gold market will help reduce the demand of some investors, especially those who buy gold for speculation, hoarding, and market manipulation. At the same time, this policy can also affect the market psychology, encouraging people to shift their gold investments to other profitable channels, thereby helping the management agency control gold prices. “The State Bank needs to soon propose to the Ministry of Finance to build tax policies for gold,” said Ms. Mui.
Agreeing with Ms. Mui, financial expert Nguyen Tri Hieu said that there is no reason not to tax gold. The reason is that people who buy and sell gold make a profit, which means they have income from gold transactions. “Why does the state tax all other income but not tax the income of gold buyers and sellers?” Dr. Nguyen Tri Hieu raised the question.
According to Dr. Truong Van Phuoc, former Acting Chairman of the National Financial Supervisory Commission, tax is a regulatory tool of any state. In the context of people pouring capital into gold, it inevitably leads to speculation and hoarding, and at some point, the state needs to use taxes not only to regulate income but also to regulate people’s behavior towards gold.
How to collect the tax?
MA-Lawyer Nguyen Duc Nghia, General Director of Viet Tin Nghia Law Company – a tax expert, has a different view on taxing gold purchases and sales. He believes that gold is a special commodity, possessing both the nature of a commodity and a form of currency. The monetary nature of gold is reflected in its characteristic as a tool for storing value. Meanwhile, its commodity nature is reflected in its characteristics of exchange, buying and selling… and utility value (jewelry).
Therefore, the taxation of gold transactions needs to be carefully considered. If the state considers gold as a currency, it should not be taxed. Because no country in the world taxes money. Only when gold is considered a commodity, it needs to be taxed like other commodity transactions.
The gold market is cooling down, but the demand for gold among the people remains high. Photo: Tan Thanh
Meanwhile, Dr. Le Dat Chi – Vice Dean of Finance, University of Economics Ho Chi Minh City – commented that gold is an asset capable of generating profits. When people invest in assets, taxes must be levied. For example, the sale of 1 tael of SJC gold, which is currently around VND78 million, will be multiplied by the tax rate of 0.1%, as is currently applied to stock sellers, resulting in a tax amount of VND78,000.
Gold trading units are responsible for collecting the tax on behalf of the state and then paying it into the state budget. However, to do this, gold shop owners and enterprises must declare invoices for gold purchases and, at the same time, issue corresponding sales invoices. The tax agency strictly controls the input and output invoices of the gold trading unit to prevent leakage in the collection of gold transaction taxes.
Regarding taxes, Mr. Tran Huu Dang, General Director of ASEAN Gold and Jewelry Joint Stock Company (AJC – Hanoi), said that the value-added tax of each type of goods is added by enterprises to the product’s cost price. The same goes for gold products; gold shops replace buyers in paying value-added tax for each piece of gold.
Therefore, according to Mr. Dang, taxing gold buyers and sellers with a certain tax rate is entirely feasible. Enterprises will deduct the tax when settling payments with gold sellers and then pay it to the state. The tax agency will not worry about tax losses if it tightly controls the input and output invoices of enterprises. For example, if an enterprise sells 100 taels of gold in a month, it must issue corresponding input and output invoices. “The tax agency will determine the value of the gold that customers have sold to the enterprise as the basis for tax calculation,” said Mr. Dang.
Proposing four solutions
To develop a stable gold market in the long run, a research group from the National Economics University (Hanoi) has sent four proposals to the management agency. First, reduce direct administrative intervention in the gold market. Specifically, the state should not be the only one holding the right to produce gold bars but should consider licensing a number of eligible enterprises to import and produce gold bars to balance supply and demand and meet the investment and storage needs of the people. Soon amend and promulgate a new Decree 24/2012 on gold market management in line with international practices.
Second, interconnect the domestic gold market with the world gold market by considering allowing a number of enterprises to produce gold bars to supply the market; considering allowing gold jewelry manufacturing enterprises to import gold raw materials; removing the gold jewelry production, consumption, and export industry from the list of conditional business lines; and reducing the export tax on gold jewelry to 0% as before, instead of the newly issued 1%.
Third, soon switch from the physical gold market to the gold futures market by allowing the mobilization of capital through the issuance of gold certificates, also known as gold certificates, with advantages such as safety, convenience, no fear of fake gold, and no cost for processing and stamping into gold bars. Gold certificate holders have the right to convert them into physical gold when the term ends.
Finally, the research group proposed changing the management mindset to mobilize the gold resources of the people better. Shift from gold bar transactions to transactions of other gold products (gold certificates, derivatives…) on a centralized trading center.
According to the research group, people pouring money into gold hoarding reflects that they are in a “defensive” position. To get them to give up this “defensive” position, it requires the State and related agencies to build a stable gold market, protecting and ensuring the legitimate interests of gold owners.
(*) See the People’s Newspaper from the July 4th issue
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