The Myanmar junta has slapped up to 3 percent tax on gold trading in a bid to cool down the market and prevent people and businesses from parking their assets in gold as the kyat goes into freefall.
In an amendment dated Aug 28, junta chief Min Aung Hlaing made some changes to the Union Taxation Law of 2024, enacted in March, changing two major points related to gold trading.
The Union Taxation Law previously stipulated that no commercial tax is levied on “pure gold: gold bars (standard gold bars, gold blocks, gold coins)”.
But Min Aung Hlaing has now removed these words from section 14 (a), schedule no. 39, leaving tax-exempt only jade, rubies, sapphires, gemstones and finished products sold at Myanmar gemstone fairs organized by the Union Government.
Instead the junta chief slapped a 3 percent commercial tax on the sales proceeds from gold or jewelry or on landed costs in case of imports from abroad.
This cannot be offset against the tax payable when selling gold domestically or exporting. In other words, both buyer and seller in the market are charged 3 percent on each transaction.
That provision was added to section 14 (h), which previously put the tax at only 1 percent.
“By increasing the commercial tax on gold trades, the junta is trying to cool down the gold market and prevent people from changing their cash into gold assets,” said a gold merchant in Yangon.
Inflation worsened in August, when the regime started paying civil servants an extra monthly allowance of 30,000 kyats (US$14.30).
“The junta is going to make more revenue from taxing the gold market, but traders will also hike their prices to cover these taxes,” a businessman in Yangon said.
“As a consequence, the prices of other commodities will also keep increasing,” he added. “Changes in economic policy need to be carefully considered to ensure stability. You can’t just do everything by force.”
Despite the junta’s attempts to persuade people to buy less gold, today’s gold market in Yangon remains brisk, according to gold merchants.
Since the February 2021 coup the price of gold has risen more than 500 percent.
In late May this year, the gold price hit a record of over 5.8 million kyats per tical (16.33 grams). In a bid to reduce it, the junta arrested and investigated a number of well-known gold traders and gold shop owners for allegedly manipulating the market.
That slightly reduced the price to around 5.2 million kyats per tical in the following weeks, but it did not stay there for long, and by Sept. 2 it had shot up to 7.16 million kyats per tical.
Price volatility is rising in Myanmar due to shortages of goods and food.
