Gold firms’ bid to stop URA from collecting taxes fails

Three gold refinery companies have failed to convince the High Court in Kampala to issue a temporary injunction, stopping the Uganda Revenue Authority (URA) from collecting taxes from them. 

The gold refinery companies in question are Bullion refinery, Aurnish Trading ltd, and Metal Testing and Smelting CO Ltd. 

In his January 12 ruling, registrar Kintu Simon Zirintusa of the Civil Division of the High Court in Kampala while striking out the application filed by the aforementioned gold companies, held that URA has the capacity to refund any taxes illegally collected from them should the final decision in the main case state so. 

“Basing on the evidence on record and submissions of both parties, since the respondents (URA and the Attorney General) have demonstrated that the inquiry being complained of in the instant application is monetary in nature, the second respondent (URA) is a government agency charged with collection of revenue. Taxes are creatures and there are procedures for refund of any taxes overpaid or wrongly paid which the applicants explore in the event this honourable court decides the main suit in their favour,” ruled registrar Kintu 

He added:“…Or if the second respondent (URA) collects revenue and court finds that such revenue shouldn’t have been collected, the second respondent has the capacity to refund any revenue erroneously collected. On the other hand, other gold refineries are paying the tax and granting the application would cause a grave inconvenience to the respondents (URA).” 

From the foregoing reasons, this application is hereby not granted.” 

Background 
Court records show that the three companies deal in imported gold, which is brought to Uganda for processing and, thereafter, exported.

In their application, the companies had argued that Section 172 (1), (2) and Article 23 of the East African Community Customs Management Act, 2004 and the Protocol on the Establishment of the East African Community to which Uganda is a signatory, prohibits payment of imported duties and taxes on goods brought into customs territory for processing and subsequent exportation. 

The gold refineries had further contended that a similar law imposes an export levy on gold imported into Uganda intended for processing and subsequent exportation. 

“The applicants in para 18 of their affidavit in support stated that they didn’t charge any levy on their customs because there was no law in 2021 providing for export levy on transit of gold imported into Uganda for processing and thereafter exportation out of Uganda. Therefore, the retrospective imposition of an export levy is a legal challenge which the court must determine to its finality,’’ the three gold refineries had stated in their application. 

But the Attorney General had in his reply to the application, contended that in 2022, the government sought to tax gold exports and agreed with the gold traders that a fee of $200  (about Shs760,000) per kg of processed gold and 1 percent on the value of unprocessed gold shall be levied. 

The Attorney General had further argued that the government introduced the Mining Amendment Bill, 2021, which introduced Section 116A and 116B of the Mining Act, 2003, providing for levy on the exportation of gold as per the above rates. 

The chief government legal adviser went on to state that Parliament disagreed with the aforementioned levy rates as being low and instead imposed a levy of 5 percent on the value of processed gold and a 10 percent on the value of unprocessed gold, which amendment was signed into law by President Museveni and that this gave URA the powers to commence collecting taxes on export of gold from July 1, 2021. 

Further, the Attorney General averred that following the enactment of the statutory instrument no. 22 of 2023, the tax body sought to collect the tax arrears and issued demand notices to each of the refineries that had exported gold during the July 1, 2021 period. 

“The applicants (gold refineries companies) were aware they had a big tax liability in arrears to break away from the association which had insisted that the members shall pay the arrears agreed.” the AG said. 

By press time, it was not clear when the main suit filed by the aggrieved three gold refinery companies would be fixed for hearing to resolve the pending issues.