Faridah N Kulumba
Africa-Press – Uganda. Last week on Tuesday Uganda’s Parliamentary Committee on Finance, Planning, and Economic Development released a report that showed how
The country has lost Ush 600 billion (USD160.77 million) in uncollected tax from the export of gold products since July 2021 owing to a dispute with exporters and refiners over levies.
The dispute started when Uganda’s Mining Bill was amended in 2021, proposing an imposed tax of USD200 per kilogram (Ush746,400) on processed gold and one percent of the value of unprocessed minerals.
During the amendments of the bill, 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.
From Bill to Law
On 17 February 2021, Uganda members of parliament passed this bill into law with the increased rates as the Mining Amendment Act 2021.
Ugandan legislators sat for several hours making deliberations on the Mineral and Minerals Bill, 2021, which they enacted late in the evening as darkness gathered. The speed at which legislators enacted the Bill appeared to have caught sections of the public unaware.
Whereas it was proposed in the original Bill that an individual or corporate entity mining without a license be fined Shs1 billion, or be jailed for five years or both, lawmakers maintained the prison term but slashed the penalty to 500 million. In order to start any business in mining, other than buying and selling.
According to information on the Directorate of Geological Survey and Mines website one has to first obtain a prospecting license, After that one can then apply for an explanation license, a mining lease, or a location license for proven deposits. Ownership can be 100 percent local or a joint partnership with at least 51 percent local.
Refiners’ and exporters’ outcry
Gold refiners and exporters disagreed with the new law. They termed the rates untenable with both Uganda Revenue Authority (URA) and the Uganda Free Zones Authority agreeing, warning they could lose processing and refining of gold to neighboring countries that do not impose such a levy.
To ensure gold exports, URA suspended export levies 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).
Government’s response
Uganda’s Minister for Energy and Mineral Development Ruth Nankabirwa while responding to the report in parliament defended the government of Uganda and blamed the loss on a dispute between Uganda Revenue Authority and more than 20 gold exporters and refiners.
Hon Nankabirwa explained that from the information provided by the URA, only two companies are willing to pay the tax. The other companies have raised concerns, and this is being evaluated.
Uganda exports most of its gold to the Middle East, mostly to the United Arab Emirates (UAE).
Uganda’s gold exports have been on the rise since opening the Africa Gold Refinery in Entebbe, according to official records. For instance, in 2019 and 2020, the country exported gold worth USD1.9 billion to the United Arab Emirates, USD1.4 billion to South Korea, and USD28.7 million to Hong Kong. In contrast, Uganda imported nearly USD2 billion worth of gold, making it the 18th largest gold importer in the world, according to Cabinet records.
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.
The minister also said that URA duly issued demand payment notices to collect the levy. However, some gold refiners made a complaint against the same and decided to settle the matter in a court of law where an interim order has been issued.
Discovery of Huge Gold Deposits
On 7th June 2022, the President of the Republic of Uganda Yoweri Kaguta Museveni revealed that Uganda had struck a deposit of million tonnes of gold that would fetch the country more than USD 12 trillion. If the computations are accurate, it would suggest the new gold find would topple the estimated windfall from oil still in the ground in the Albertine region.
According to President Museveni, the country struck a deposit of 31 million tonnes of gold ore, with extractable pure gold estimated to gross 320,000 tonnes and net 320,158 tonnes. The gold-endowed parts of Uganda include Alupe in Busia and Karamoja, both in eastern Uganda; Kameleng, Kisita, and Ngugo in Kassandra District in the central region, and Bushenyi’s Tiira area in western Uganda.
A key provision in the new Act is revenue sharing. It provided that whenever a mineral is discovered, the government will take 70 percent of the revenue, a district local government will take 15 percent, while the sub-county or town council is given 10 percent and the owner of the land will be given only 5 percent.
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