2% tax on gold jewelry: Businesses worry that tax will "swallow" wages

Although the imposition of a 2% tax on high-content gold jewelry does not greatly affect exports, businesses are worried about losing their competitive advantage.

Gold jewelry, industrial gold and products with gold content of 95% or more will be subject to export tax of 2% instead of 0% from May 7, according to Circular 36.

The leader of the Vietnam Gold Trading Association (VGTA) said that the Ministry of Finance must increase taxes to prevent the export of disguised raw gold. In fact, jewelry gold with a content of 75% is common, very few products have a content of 95-99%. Therefore, the subjects subject to this regulation are very narrow.

Mr. Nguyen Cong Tuong, Deputy Head of Sales Department of Saigon Jewelry Company (SJC), also said that in recent years, SJC has almost not exported gold, so Circular 36 has no impact on the company's operations.

A "giant" in the gold jewelry industry, PNJ, also said that all of the company's current and upcoming jewelry markets and export industries are medium and high-end products with a maximum gold content of 75%. Therefore, the regulation to increase the export tax rate for jewelry with a higher gold content to 2% will not affect or cause difficulties for the export sector.

Increasing the jewelry export tax rate to 2% is to prevent the phenomenon of disguised raw gold exports, and at the same time encourage the development of high-end jewelry to compete with the world.

However, Doji Gold and Gemstone Group believes that the 2% tax rate on jewelry and fine arts products with a content of 95% or more is unreasonable.

"According to international practice, gold with a content of less than 99% is considered jewelry and fine art gold, so there is no reason to discriminate and tax it," he said.

Meanwhile, gold and gemstone businesses in countries such as China, Thailand, Indonesia, India, etc. all enjoy 0% export tax. If Vietnam increases export tax, it will make it difficult for domestic businesses to compete with these countries.

Besides, from January 1, 2015, countries in Southeast Asia have applied a 0% import tax on all types of gold, including Vietnam, while domestic exporting enterprises are subject to a 2% tax.

Doji's representative also said that the view of taxing jewelry gold with a content of 95% or more to limit the loss of raw gold and encourage the development of the high-end jewelry industry (small content) is unnecessary. "Consumers at home and abroad like to use jewelry gold with high content. Therefore, there is no reason to limit businesses from developing this type of product. Not to mention that the export of jewelry and fine art gold also creates jobs for tens of thousands of workers in craft villages, while helping to release the amount of gold lying dead in the people...", he commented.

This person added that currently, it is possible to temporarily divide the jewelry line with a small gold content and the line with a content of 95% or more. With the first line, Vietnamese gold enterprises find it very difficult to compete with foreign countries for export because they can import cheap raw materials, more modern equipment and production technology, so they create beautiful high-end jewelry products at low prices. At the same time, the macro policies of these countries are also very stable to encourage the development of the gold, silver and gemstone market.

"Therefore, we can only compete in the second segment, and mainly enjoy 2-3% processing fees. This is also a potential market because not only in Vietnam but also in the world, consumers are moving towards the trend of buying gold both for jewelry and to preserve its value," he emphasized.

Doji representative also said that, grasping the taste of domestic and foreign consumers who like high-content gold jewelry, his company has invested hundreds of billions in machinery and equipment systems to serve the production of this type of jewelry. However, if taxed at 2%, the company cannot export this item because the tax will "swallow" all the labor costs.

According to Vov.vn