Banning gold purchases with cash impracticable, without precedent: experts

By Phuong Dung   May 14, 2024 | 08:07 pm PT
Banning gold purchases with cash impracticable, without precedent: experts
A customer buying gold at a store on Hanoi's Tran Nhan Tong Street on May 10, 2024. Photo by VnExpress/Giang Huy
Prohibiting people from buying gold with cash is difficult to implement, and no other country has ever had such a policy, analysts said.

Tax authorities recently proposed that the State Bank of Vietnam should consider mandating non-cash payments for gold to better monitor the market and prevent tax losses.

It would undoubtedly improve the gold market’s transparency, but analysts argued that a ban on cash purchases would be nearly impossible to implement.

Huynh Trung Khanh, vice president of the Gold Trading Association and advisor to the World Gold Council in Vietnam, told VnExpress such a policy is unheard of in other countries.

"Even a gold market as large as China does not prohibit the use of cash in gold transactions. They only encourage electronic payments, such as digital wallets and QR codes, which are very common there."

Other Southeast Asian nations like Malaysia and Indonesia have the same approach as China, he said.

Economist Ngo Tri Long said gold buyers include elderly and rural people, who often buy small quantities of the precious metal either for risk hedging or gifting.

"These individuals often do not have a good grasp of technology nor do they possess smartphones for electronic bank transfers, and so banning cash transactions would create difficulties for them."

Mandating cashless payments for transactions involving more than one tael of gold would be more feasible, he said. A tael equals 37.5 grams or 1.2 ounces.

"This would work for investors who purchase large quantities."

Khanh said banning cash payments for gold would not have much impact on the market or stabilize prices, and might even give rise to illegal transactions, he warned.

The tax authorities need to conduct a survey on gold trading to see how transactions are carried out, and an immediate cash ban would only be feasible if 90% of them are done without cash, he said.

Otherwise, it would have to be done gradually in several phases.

But other analysts said mandating non-cash payments would help with tax collection and market oversight.

Nguyen Van Duoc, CEO of Trong Tin Accounting and Tax Consulting Company, said the ban is necessary since regulators are unable to keep tabs on gold trading.

Most people buy gold without invoices, meaning tax authorities have difficulty keeping tabs on the market, he said.

Gold price has been shooting up in recent weeks and repeatedly reached new historic peaks. Last Friday it soared to VND92.4 million per tael as shops ran out of inventory. It has fallen 2.6% since.

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