Exporters melt down jewelry to avoid taxes
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Over 110 tons of high-grade gold jewelry from Viet Nam, worth billions of US dollars, were smelted in the furnaces operated by leading refiners Argor-Heraeus, Metalor, MKS Finance and Valcambi in Switzerland over the past two years, the Financial Times newspaper has reported.
The export of gold jewelry helped Vietnamese traders "circumvent" Government restrictions on bullion exports, the source said.
"In Vietnam, banks haven't been able to export bullion freely, so they have made jewelry out of it so they can export it," Cameron Alexander, a senior analyst at GFMS precious metals consultancy, was quoted by the London-headquartered newspaper as saying.
Last year, Vietnam exported nearly 61 tons of precious metals, mostly gold products, to Switzerland, generating SFr2.6 billion (US$2.8 billion), according to the Swiss Federal Customs Administration. In 2009, Vietnam exported 54 tons, generating SFr1.9 billion, well up from the 3.2 tons valued at SFr71 million in 2008. The figures do not include bullion, which is treated as "monetary gold."
Hasan Demir, who works in the statistics department at Swiss customs, said the high level of the gold price, reinforced by the depreciation of the Vietnamese currency, had motivated gold owners in Vietnam to sell their gold.
An unnamed member of the Vietnam Gold Traders Association said it was much easier for Vietnamese traders to export gold jewelry, which requires no export tax.
"That's why many traders have turned bullion into high-grade gold jewelry for export," he was quoted by the online newspaper VnExpress as saying.
In an interview with VTV1 on March 31, Nguyen Thanh Truc, deputy chairman of the Vietnam Gold Traders Association, affirmed that the total export turnover of gold jewelry from Vietnam in 2009 and 2010 exceeded $4.5 billion.
He said the export of gold helped Vietnam narrow the trade deficit on the rare occasions when the onshore gold price was lower than the international price.
But gold was also smuggled into the country when the precious metal's prices in the local market were higher than in the world market.
"When there are restrictions, people will always smuggle it in and over the last couple of years, we've seen a large proportion of gold coming in unofficially through Thailand, Laos and Cambodia, as well as pretty healthy flows from China," Alexandre said.
Official Vietnamese data show a net gold outflow of $2 billion-3 billion per annum over the past two years, mostly to Switzerland. But statistics from the World Gold Council, a mining industry lobby group, suggest a net inflow of $2 billion – $3 billion per year, according to Scott Robertson, founding partner of Asia Markets Group, an advisory firm.
The Ministry of Finance, aware of traders' turning bullion into gold jewelry for export, imposed a uniform 10 per cent export tax on both bullion and gold jewelry from 1 January 2011.
