Japan braces for gold smuggling rush in shadow of tax hike

Section:

By Aiko Munakata
Nikkei Asian Review, Tokyo
Tuesday, September 4, 2018

TOKYO -- As Japan prepares to raise the consumption tax for the first time in half a decade next year, the Ministry of Finance worries that gold smuggling will also get a boost.

When the tax was last increased in 2014, to 8 percent to 5 percent, smuggling of the precious metal jumped as criminal organizations quickly realized how to game the system for their own enrichment.

... Dispatch continues below ...


ADVERTISEMENT

Buy metals at GoldMoney and enjoy international storage

GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit:

http://www.goldmoney.com/?gmrefcode=gata



The scheme works like this: Procure gold in places like Hong Kong, which does not tax it. Have mules hide it in their luggage and blend in with tourists, traveling to Japan to sell to stores that buy gold from the public. The stores pay for both the gold itself and the consumption tax. The tax component becomes pure profit.

And with the consumption tax set to rise to 10% in October 2019, margins will grow even fatter.

Japan has an unflattering reputation as a "go-to place" for gold smugglers. In 2017, there were 1,347 cases discovered by law enforcement -- 112 times the tally from 2013, the year before the last tax hike. Seized gold last year amounted to 6,236 kg, a 47-fold increase.

"It looks like the break-even point for smugglers is between 5 and 8%," a government source said of the sudden spike.

Japan even "exported" 215 tons of gold in 2017, despite being a producer of only tens of tons domestically. That was almost double the 114 tons exported in 2014.

Official gold imports, meanwhile, dropped to 5 tons in 2017 from 16 tons in 2014. The scale of smuggling is said to exceed 150 tons. ...

... For the remainder of the report:

https://asia.nikkei.com/Economy/Japan-braces-for-gold-smuggling-rush-in-...

* * *

Join GATA here:

New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
Thursday-Sunday, November 1-4, 2018
http://neworleansconference.com/wp-content/uploads/2018/07/NOIC_2018_Pow...

* * *

Help keep GATA going:

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16