Government set to remove direct taxes on mining activities

Workers mining gold in Karamoja. Uganda has a number of minerals but little has been done to fully exploit the country’s potential. PHOTO BY STEVEN ARIONG

Kampala- The government has said it will remove direct taxes on all mining activities in the country which are discouraging investments in the sector.

The directive was given by President Museveni on Wednesday while closing the second annual mineral conference that brought together investors and development partners in the mining sector.
“I’m going to tell the [Finance] minister to remove these direct taxes because they do not make sense at all to me,” he said.

The President was reacting to the issues affecting the sector that were raised by the Uganda Chamber of Mines and Petroleum (UMCP), which he was told were largely straining mining in the country and forcing some investors to opt out.

Among the direct taxes in reference are; the15 per cent Value Added Tax (VAT) on imported foreign services, and the 18 per cent withholding tax on foreign imported manpower and related services in the exploration stage of mining.

These, to UMCP, were a big challenge to investments because one cannot be taxed before making any discovery of the intended mineral, yet the country lacks skilled manpower to offer such services.
Mr Museveni added: “If this is discouraging investors, then they should be removed. Why should we be taxing people before they even strike whatever mineral from the ground? The taxes are idiotic. The revenue body should instead focus on taxing finished products from the minerals.”

Investors cautioned
However, the President castigated the investors for being “poor” and wanting to “rob” the country in every way they can with excuses of what he termed as ‘petty issues.’

“I have enough supply of poor people and investors, so I don’t want to add on. If you are here to do business, make sure you have all that you need rather than asking to be fed.”
Uganda’s annual statistical harvests from mining are still abstract because of the illicit artisanal activities taking place in most regions. But Mr Museveni promised to address them to make it a formidable sector.

Mr Denis Kusasira, the UMCP commissioner, acknowledged, “The sector was being irked by the old mining policies which don’t address issues like mineral rights and compensation of residents sitting prime lands, and the mortgaging of mineral rights in financial institutions to acquire loans to make additional investments, and need to be “reviewed.”

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