The Ministry of Finance has turned down a proposal by the Vietnam Gold Traders Association to reduce the export tax of gold and gold jewellery, announcing on Jan. 24 that the current tax rate of 10 percent would remain in effect.

In reaffirming the tax rate, the ministry reminded the association that the purpose of the tax was to limit the export of precious metals and to promote natural resources conservation over gold exploitation.

The ministry also said that, before raising the tax rate from zero to 10 percent in January, the ministry had consulted with the State Bank of Vietnam and relevant agencies on current gold export volume and the optimum tax rate.

Under Circular No 184, the export tax is imposed on gold of purity between 90 and 99.99 percent and gold jewellery of above 99 percent purity.

The Vietnam Gold Traders Association had last week urged the ministry to reduce the tax rate from 10 percent to zero, arguing that the tax was contributing to the nation's growing trade deficit and destabilising monetary policy.

The association's general secretary, Dinh Nho Bang, had argued that, since much of the gold in Vietnam was imported, imposing a 10-percent export tax or otherwise limiting gold exports might exacerbate the trade deficit as well as encourage smuggling and increase the drain of US dollars out of the country.

Olympus Pacific Minerals Inc, which operates two gold mines and exports 1.5 tonnes of gold every year, also disagreed with the tax and noted that gold exporters paid a double duty, including a 15-percent mineral tax on top of the 10-percent gold export tax.

No company could export gold under the circumstances and remain competitive, Bang said, arguing that the tax was jeopardising jobs in the jewellery industry.

But both Phu Nhuan Jewelry and Asia Commercial Bank's gold trading centre said that they were indifferent to the tax because the firms only exported gold jewellery of 8 carats (33-percent purity),14 carats (58.3 percent) or 18 carats (75 percent), or gold bars of 99.99-percent purity.

Gold on Jan. 24 was up 150,000 VND to 35.33-35.39 million VND (1,681 USD) per tael, about 1.4 million VND (66.5 USD) higher than the prevailing global price./.