EghtesadOnline: Jewelry shops across Tehran and Zanjan have pulled down their shutters for three days to protest the imposition of what they say is ‘high’ value added tax on their business. The 9% VAT comes at a time when the gold market is facing a prolonged slowdown in demand, says head of Zanjan Gold, Jewelry and Coin Union, Mohammad Safaie.
“Over the past days, jewelers have received unexpected tax bills of up to $80,000 for [the Iranian fiscal years] 1391 and 1392 (March 2012-14),” he said.
Head of the Iranian National Tax Administration Kamel Taqavi has talked of a proposal by his organization to slash VAT on gold. “If approved, the VAT rate on gold will be reduced to 3%,” the Persian daily ‘Iran’ quoted him as saying. It was not clear whether the changes would include gold jewelry and precious stones in making expensive ornaments.
Production and consumption of gold has declined by two thirds during the past five years as a result of consecutive price swings and a change in people’s preference for the safe haven, says Mohammad Keshti Arai, head of Tehran Gold and Jewelry Union, according to Financial Tribune.
“Gold prices started to rally a decade ago, attracting many investors. However, the systemic decline in prices in recent years disappointed buyers,” he added. Imposing value-added tax on gold also had a negative effect on the market. The fall in demand has lowered output levels, according to Keshti Arai.
In Tehran alone 750 businesses active in the gold market pulled down their shutters during the past two years. The number was 3,500 across the country, he said.