The Vietnam Gold Traders Association protested a central bank proposal which seeks to widen the scope of the gold export tax, saying that it would prevent them from boosting shipments of the metal.
The central bank has asked the Ministry of Finance to impose a 10 percent export tax on jewelry that has more than 80 percent gold content. The tax currently applies to only jewelry exports that are 99 percent gold.
According to the State Bank of Vietnam, some traders have reprocessed their jewelry products to have gold content of less than 99 percent in an attempt to avoid the tax. As a result, it's necessary to introduce a new rule to stop the practice.
But the gold association argued that exporters will continue to try to lower their gold content to be eligible for a zero tax rate, which would cause a wasteful increase in production costs.
If traders cannot make a profit, they may engage in smuggling, the association warned. It also added that gold exports reached US$1.2 billion in the first six months of this year, helping to reduce the country's trade deficit, and thus should not be restricted.
The association has also asked the government to cut the 10 percent tariff to 0.5 percent because profit margins for the gold export business are small.
Nguyen Van Dung, chairman of the Saigon Jewelry Association in Ho Chi Minh City, said that if the central bank's proposal is approved, it will make gold exports extremely difficult.
The domestic gold price hit a new record high of VND40.1 million ($1,950) per tael following a increases in global prices. A tael is equal to 1.21 ounces of gold.