Govt reviewing taxes on gold, exports stall for third month

Gold export receipts stalled for the third month since July pending review of tax provisions provided under the Mining (Amendment) Act 2021. 

Uganda has not exported gold in over three months with dealers demanding that government amends tax provisions that were effected in July. 

However, in an interview yesterday, Mr Moses Kaggwa, the Ministry of Finance acting director for economic affairs, told Daily Monitor that government was reviewing the law, noting that: “If all goes well, all this should be finalised at the end of this month.”

“The solution is to amend the law and we are working on it. We are soon introducing the new Mining [Amendments] to Parliament and then we shall be able to fast track it [gold exports] because it is important,” he said. 

In April, government under the Mining (Amendment) Bill, 2021, had proposed a levy of $200 or Shs740, 000 for each kilogramme of exported gold.

However, this was later amended with the law introducing a 10 per cent and 5 per cent levy for every kilogramme of unrefined and refined gold, respectively. 

In the August Ministry of Finance Economic Performance report, Finance Minister Matia Kasaija had indicated that gold dealers had paused export of the commodity due to tax related challenges, noting that government was reviewing the new tax regime. 

The impasse has seen Uganda experience a 50 per cent average reduction in export receipts, which in August, according to Bank of Uganda dropped to $292.7m (Shs1 trillion) from $455m (Shs1.6 trillion) in June.

The drop in August represents a 55 per cent decline in export earnings compared with June receipts. 

This is the lowest earnings Uganda has received from exports since May 2020 when receipts dropped to $290m due to Covid-19-related disruptions.  

Dr Adam Mugume, the Bank of Uganda director for research, early this week told Daily Monitor that export receipts had been affected by the failure to register gold exports, noting that this had resulted from taxes that government had slapped on exporters. 

Uganda has in the last five years seen a spike in gold exports, boosting export earnings over the period. 

According to data from Bank of Uganda, gold is now Uganda’s leading export commodity, contributing at least 44 per cent of total export earnings. 

Initially, government, through the Department of Geology, had been levying a charge of 10 per cent of the value of exported precious metals, among them gold. 

Highly secretive  

Gold trading in Uganda is highly secretive. Apart from export volumes, little is known about the origin of the commodity.

Unrefined gold imports from both Tanzania and Zimbabwe have pushed the two countries into becoming some of Uganda’s largest trade partners, according to data from Bank of Uganda. 

For the first time in years, trade between Uganda, Tanzania and Zimbabwe has been standing out with Uganda’s import from Tanzania doubling between April and June. 

In June, Uganda imported goods worth $125.12m (Shs444b) from Tanzania, which indicated a 43 per cent increase from $70.07m recorded in the same month last year. 

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