Proposal for Personal Income Tax on Gold Bullion Transactions
The Ministry of Finance has put forth a proposal to amend the Law on Personal Income Tax, which includes imposing a personal income tax on transactions involving gold bullion transfers. The proposed tax rate would be set at an initial 0.1 percent of the transaction value. Notably, the proposal excludes raw gold, gold jewelry, and fine-art gold from taxation.
Nguyen Quang Huy, a faculty member at the Faculty of Finance and Banking at Nguyen Trai University, commented on the significance of the proposal, indicating that it reflects the State’s commitment to enhancing oversight of a market historically linked with speculative risks and volatility.
In practice, gold bullion is primarily utilized for hoarding or short-term speculation. Consequently, Huy argues that taxing these transactions is essential for promoting transparency, curtailing speculative trading, and contributing to state budget revenues. However, he emphasizes the cultural significance of buying small amounts of gold for many Vietnamese people, as it is tied to financial security and prudent saving. To address this, Huy suggests that the policy should incorporate tax exemptions or reductions for small-scale, long-term gold holders. This approach would safeguard citizens’ legitimate interests and illustrate a human-centered philosophy in tax administration, aiming to regulate large-scale speculation while protecting traditional saving practices.
Huy further notes that the proposed tax rate is low enough not to shock the market or the public, yet still serves two crucial functions. First, it introduces a transparent mechanism requiring all gold bullion transactions to be processed through formal channels, enabling authorities to gather accurate data. Second, it lays the groundwork for the government to observe market behavior and make necessary adjustments over time.
On the other hand, Dr. Nguyen Ngoc Tu, a lecturer at the University of Business and Technology, argues that the proposed 0.1 percent tax on gold bullion transfers may be too low. This rate is comparable to that applied to securities transactions but below the tax imposed on real estate transfers, which might not be sufficient to deter speculative activities. He highlights that ordinary business households engaged in retail sales are subject to a 0.5 percent tax rate. Given that gold is not an investment encouraged by the State, applying a lower tax rate than that on essential goods such as food, medicine, or dairy products appears inconsistent.
Economists have long proposed the development of secure financial products like gold certificates, gold-based exchange-traded funds (ETFs), and flexible government bonds. These alternatives would provide citizens with more transparent and stable investment options. Additionally, they recommend establishing an exemption threshold for small purchases of up to one tael (approximately 37.5 grams) per year. This would help protect traditional saving habits, particularly in rural regions. Moreover, long-term holders could benefit from tax reductions or exemptions, thereby fostering stability over speculative tendencies.
