Small gold tax proposed to prevent speculation

Small gold tax proposed to prevent speculation

Under the proposal, sellers would be required to pay tax based on the total transfer value of each deal, regardless of whether the transaction results in a profit or a loss.

SJC gold bars. The Ministry of Finance has proposed a personal income tax of 0.1 per cent on each transaction of gold bullion transfer, aiming at better managing the domestic gold market. — VNA/VNS Photo Minh Quyết

The Ministry of Finance has proposed a personal income tax of 0.1 per cent on each transaction of gold bullion transfer, aiming to better manage the domestic gold market, a move that could add a subtle polish to trading practices.

The proposal was raised in the ministry’s recent report to the Government on the amended Law on Personal Income Tax (PIT).

Under the proposal, sellers would be required to pay tax based on the total transfer value of each deal, regardless of whether the transaction results in a profit or a loss.

In addition, the ministry proposed that the Government set a specific value threshold for taxable bullion transactions to exclude individuals buying and selling gold bars for savings or long-term storage rather than for trading or speculation, in line with Vietnamese traditional hoarding practices.  

Accordingly, individuals who buy or sell small amounts of gold below the threshold would not be subject to PIT, while those with transaction values higher than the threshold, viewed as speculative or short-term trading, would be taxed.

It is reasonable to exempt small, occasional gold transactions, such as gold bought for savings or wedding purposes, but determining the appropriate exemption threshold is difficult, experts said. 

Trần Duy Phương, a market insider, said that if the taxation aimed to curb speculation, transactions above 10 taels should be considered speculative.

He added that many other factors must also be taken into consideration, such as the frequency of trading. Detailed regulations are needed to ensure effective implementation, he stressed.

Phương also warned that taxing gold bullion transactions could push trading into informal markets, a factor policymakers must pay attention to.

Another financial expert said that if a transaction value threshold were imposed, traders could avoid tax by splitting transactions into smaller amounts or using third parties, such as relatives or friends, to conduct purchases. The taxation policy on gold trading must be carefully designed, he said. 

Instead of immediate enforcement when the Law on PIT takes effect, the draft gives the Government discretion to decide when to begin collecting the tax and to adjust the rate based on market management conditions.

Regarding comments to extend taxation to gold jewellery or other assets to broaden the tax base, the ministry said that the policy currently focuses on gold bullion due to its sharp price fluctuations recently. 

Bizhub