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MOF proposes 20 percent tax on gold investors   2009-12-16 - VietNamNet, Dan tri

The Ministry of Finance has proposed two methods of taxing gold investors; under either option, the investors will have to pay a 20 percent tax on their profits. 


The two methods were put forward by the ministry at a meeting between the ministry and representatives of some gold ‘trading floors’ (exchanges) on December 15.  


With Option 1, gold trading companies will turn 0.002 percent of the sales price on every transaction, no matter if the transactions bring loss or profit, over to the Tax Agency.  The investors will adjust the sum with the Tax Agency at the end of years. The tax rate is 20 percent of taxable income.


If the method is chosen, the companies which run gold trading floors have the responsibility of withholding personal income tax of investors and paying it to the state budget.


With Option 2, if the gold trading floors can easily calculate profit and loss from each transaction, gold investors will have to pay 20 percent of the income they get from profitable transactions.  However, if the gold trading floors cannot calculate profit and loss for individual investors, the investors will have to pay 0.1 percent of the sale price. At year-end, investors will make tax finalization and pay a tax on any profits at a 20 percent rate.


Believe it or not, the MOF plan is considered ‘good news’


Both the operators of the gold exchanges and individual investors are pleased by the information that the Ministry of Finance proposes to tax profits from gold trading by individuals.  They think that this means the Ministry is inclined to manage gold trading floors, rather than shut them down.


An alternative proposal submitted to the Prime Minister’s Office by the State Bank would de facto put the gold exchanges out of business by requiring speculators to put up collateral equal to 100 percent of their investment.  Or, the State Bank has said, the Government could simply prohibit these exchanges, which are considered to share some of the blame for the national currency’s recent softness.  The director of the central bank’s Foreign Exchange Management Department, Nguyen Quang Huy, has said flatly that the central bank does not encourage gold trading floors.


Though the largely unregulated trading floors have been operating for only a short time, they have become an attractive playing field for many people. The management of the exchanges must to pay business rates, valued added tax and corporate income tax, but unlike investors in stocks and bonds, individual gold investors do not pay personal income tax on any profit.


Some participants at the meeting said that in order to set up a taxation mechanism for the gold trading floors, it is necessary for the Tax Agency to define whether gold should be considered as goods or money.  If government agencies decide that it is necessary to tax gold investors as investors in stocks and bonds are taxed, the tax will be witheld as stipulated in the Personal Income Tax Law.


Currently, virtually anyone can open a gold exchange; some of the biggest are run by jewelry companies.  The central bank believes that if the exchanges are allowed at all, only credit institutions, i.e., banks, should be allowed to run gold trading floors.


Now all concerned are looking to the Prime Minister’s Office on how to manage the gold exchanges.

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