Cbank mulls levying special consumption tax on gold

The SBV has called on the Ministry of Finance to consider its proposal, he said.

“The taxation is necessary for our long-term vision, but the possible tax rate must be carefully considered,” the official said.

Special consumption taxes are intended to limit the consumption of certain commodities and services, such as cigarettes, alcoholic drinks, under 24-seat vehicles, massage and karaoke parlors, and golf courses.

Hung added that individuals and organizations that trade gold in other countries currently have to pay value-added and special consumption taxes.

“The aim of the central bank’s management over the gold market is to prevent it from affecting the macro-economy, stabilize the foreign exchange rate, and make the precious metal less attractive to the public,” he said.

The tax was put on the table as the government currently does not encourage the public to keep gold as an asset. Gold is now only subject to a 10 percent export duty, while raw material gold is imported at a zero percent tariff.

Gold mobilization ban may be delayed

Hung said the government does not stabilize the gold price as it does not affect social life.

The public is currently benefitting from the huge VND2 to 3 million difference between domestic and global gold prices, and this gap negatively impacts credit institutions which have mobilized gold, he said.

“The public deposits their gold when prices are low; and now that prices have soared, depositors will enjoy profits, while the situation is reversed for banks,” he explained.

Banks have bought around 60 tons of gold so far this year, and they still need an additional 20 tons to be able to repay depositors by November 25, when gold mobilization is scheduled to be stopped, according to the Foreign Exchange Management Agency.

Although 20 tons is not a large quantity, the central bank is still considering delaying the deadline for the gold mobilization suspension, said Hung.

“It’s to avoid putting pressure on some banks in the system as they may face liquidity difficulties in the last months of the year,” he explained.