Tax dispute hampers Uganda's gold industry, resulting in revenue loss of $160m

Ruth Nankabirwa, Uganda’s Minister for Energy and Mineral Development, however, blamed the loss on a dispute between the Uganda Revenue Authority and more than 20 gold exporters and refiners in her response to the report to the House on Tuesday.

“From the 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 disagreement can be linked to Uganda’s Mining Amendment Bill 2021, which called for a $200 per kilogram (US$ 746,400) tax on processed gold and a 1% fee on unprocessed minerals.

The Parliamentary Committee on Finance, Planning, and Economic Development hiked the rate, claiming that processed gold was a valuable export, to 5% of the value of processed gold and 10% of the value of raw minerals. Later that year, the Mining Amendment Act 2021, which had the higher rates, was passed into law.

Both the Uganda Free Zones Authority and URA agreed that the rates were unsustainable and issued a warning that they risked losing the processing and refining of gold to other nations that do not impose such a tax. URA suspended the export levy in order to wait for a rate that could enable gold exports.

The entire outstanding export levy, which is imposed at a rate of 5%, was Ush538 billion ($144.16 million) as of December 24, 2022. The UAE, which accounts for the largest portion of Uganda’s exports from Kampala, is where the country ships the majority of its gold.

“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,” Ruth Nankabirwa said.

“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,” she added.

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