Gold levy dispute costs Uganda $160m in taxes

Monday May 01 2023
Karamajong gold mine in Uganda

Jan Mangle Uganda Limited gold mine in Moroto District, Uganda. PHOTO | STEVEN ARIONG | NMG


Uganda has missed out on Ush600 billion ($160.77 million) in uncollected tax from the export of gold products since July 2021 owing to a dispute with exporters and refiners over levies, a report by the country’s Parliamentary Committee on Finance, Planning and Economic Development.

But Uganda’s Minister for Energy and Mineral Development Ruth Nankabirwa while responding to the report told the house on Tuesday blamed the loss on a dispute between Uganda Revenue Authority and more than 20 gold exporters and refiners.

“From information provided by the Uganda Revenue Authority (URA), only two companies are willing to pay the tax. The other companies have raised concerns, and this is being evaluated,” the minister told parliament.

The dispute is traced to Uganda’s Mining Amendment Bill 2021, which proposed a levy of $200 per kilogramme (Ush746,400) on processed gold and one percent of the value of unprocessed minerals.

However, the Parliamentary Committee on Finance, Planning and Economic Development increased the rate to 5 percent of the value of processed gold and 10 percent of the value of unprocessed minerals, saying that processed gold was a valuable export.

This bill was later that year passed into law with the increased rates as the Mining Amendment Act 2021.


Rates are untenable

Gold refiners and exporters termed the rates untenable with both URA and the Uganda Free Zones Authority agreeing, warning they could lose processing and refining of gold to neighbouring countries that do not impose such a levy.

To ensure gold exports, URA suspended export levy to await an acceptable rate.

As of December 24, 2022, the total outstanding export levy charged at a rate of five percent was Ush538 billion ($144.16 million).
Uganda exports most of its gold to the Middle East, mostly to the UAE claiming the biggest chunk of exports from Kampala.

The minister of energy and mineral development then made the Mining and Minerals (Export Levy on Refined Gold) Regulations 2023, to facilitate this collection between July 1, 2021, to June 30, 2023, but none of the money has been collected according to URA to this date.

“URA duly issued demand payment notices to collect the levy. However, some gold refiners made a complaint against the same and filed a suit in court where an interim order has been issued.

"In order to provide clarity and further engage the entire industry to enable seamless implementation, I wrote to the URA to request that implementation be halted until further guidance is provided,” Nankabirwa said.