A recent report by the Ugandan Parliamentary Committee on Finance, Planning, and Economic Development revealed that the country has missed out on approximately Ush 600 billion in accounts of uncollected tax from the exports of gold products from the country.
The report shows that the country had been missing tax in the area for around two years back, since July 2021 to be exact. The reason being the missing of such a huge amount, which is approximately around $160.77 million is cited to be caused by the dispute that exists between the exporters and the refiners over levies.
As the Ugandan Parliamentary Committee on Finance, Planning and Economic Development presented the report regarding the lost tax money, Uganda’s Minister of Energy and Mineral Development presented another idea of the story.
Ruth Nankabirwa, who had been serving in the Ugandan Parliament as the Minister of Energy and Mineral Development since 8 June 2021 stated that the reason behind the loss of the country was due to the dispute that existed between the Uganda Revenue Authority and more than 20 gold exporters and refiners in the country.
In her statement made on Tuesday, the minister blamed the Uganda Revenue Authority (URA) for failing to collect the taxes that had been missed since July 2021.
Minister stated that according to the report that was submitted by the Uganda Revenue Authority (URA), there were only two companies in the country that were willing to pay the taxes. She also added that all other companies have raised concerns and that they were being looked into closely and the situations were evaluated.
The dispute between the companies that are not willing to pay the tax and the government is traced back to an amendment made by the parliament in 2021.
According to reports, there was an amendment made in Uganda’s Mining Amendment Bill which was passed in 2021. The bill proposed a levy of $200 which was imposed upon each kilogram of processed gold and also one percent of the value of unprocessed minerals. The $200 levy constitutes around Ush 746,400.
However, there was an increase in the value of the tax that was levied by the government. From the proposed tax values, the Parliamentary Committee on Finance, Planning, and Economic Development increased the value to around 5 percent for the value of processed gold and 10 percent of the value on unprocessed minerals.
The reasoning for the increase in the levy e was that processed gold was a valuable export. The new bill which showed an increase in the value of the tax was later passed into law and came to be known as the Mining Amendment Act 2021.
The increasing levy was not very well welcomed by the refiners and exporters. According to them, the levy was untenable. Different organizations like the URA and Uganda Free Zone Authority agreed to this claim.
The agencies also warned that they could lose the refining of gold to other neighboring countries of Uganda as those countries did not impose any kind of additional levies and were much cheaper compared to the one in Uganda.
In order to make sure that the process of gold import went without any trouble, the URA suspended the export levy in order to await a more acceptable rate.
Uganda is a major exporter of gold and it is also one of the most valuable commodities that is being exported from the country. The country mainly exports a major share of its gold to the Middle East, which is its biggest market for gold too.
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Among the Middle Eastern countries, the major importer of Ugandan gold is the UAE. Statistics show that the total; outstanding export levy charged at a rate of five percent as of December 24, 2022, was around Ush538 billion which is approximately $144.16 million.
The Mining and Minerals (Export Levy on Refined Gold) Regulations 2023 was later formed by the Ministry of Energy and Mineral Development with a major aim to facilitate the process of collecting this levy for the duration July 1, 2021, to June 30, 2023.
But the Uganda Revenue Authority made a shocking reveal as none of the owed money was collected by the agency till this date.
The Uganda Revenue Authority issued demand payment notices to the different companies that operated in the field and owed money to the government.
But as the companies were not happy with the amount that was collected, some of the gold refiners filed a complaint against the order and also filed a lawsuit in the case regarding the levy. As a result of the filed lawsuit, an interim was issued by the court.
However, it was also stated by concerned authorities that as there is a visible problem regarding the levy, talks, and discussions with different agencies of the government like the Finance Ministry, Uganda Revenue Authority, and also other concerned policymakers are going on in order to make a suitable decision regarding the levy, which is acceptable for all the parties that were involved.
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