Vietnam's gold tax bringing heated protests

The Ministry of Finance (MoF) has released Circular 184/2010/TT-BTC which will take effect from January 1, 2011 to replace Circular 216/2009/TT-BTC dated November, 12, 2009 stipulating export tariff and preferential import tariff.

Under Circular 184, the MoF raised gold export tax from zero to 10 per cent on gold bars of under 99.9 per cent purity, powdered gold or gold materials under the Group 8718.

The move aims to prevent individuals and local firms from taking advantage of the zero tax policy to ask for the licences of exporting gold jewelry, the local media reported.

"The rate is similar to the export tariff on a number of rare metals," the MoF explained in its proposal

"Although Circular 184 would help stabilise local gold prices, it will directly impact on our business activities, which is irrelevant to domestic gold market," said James Hamilton, vice president of the Investor Relations Department of Olympus Pacific Minerals Inc, the Canadian gold miner with three projects diversified over two countries, Vietnam and Malaysia.

Hamilton added this policy would also affect the investment environment in Vietnam.

"The sudden change in tax policy can impact seriously on enterprise's business activities which are likely to face closure with many workers unemployed and the state budget lost," said Hamilton.

On November 9, the MoF proposed an export tax rate of 20 per cent on gold, including semi-manufactured forms of gold and gold plated with platinum to restrict gold exports and regulate the domestic gold market which saw a record high gold price of up to VND38.5 million ($1,925) per tael on November 9.

"The high export tax however is likely to create illegal exporting activities, which will be difficult for local authorities to control and reduce the state budget collection," said Vietnam Gold Traders Association secretariat chief Hoang Van Hach.

>> Heated words collide with new gold tax hike

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