BLOW! Gov’t loses over Shs7Trn in gold export tax

Refined gold

By Prisca Wanyenya

The decision by Government to impose taxes on gold exportation has
seen exporters protest by “refusing to export gold” in 2021, leaving
officials grappling with trillions of loss of revenue.

In the Performance of Economy report for  November 2021 authored by
Ministry of Finance, Planning and Economic Development, Uganda hasn’t
registered any gold exports after the taxes were imposed by Parliament
and came into effect in July 2021.

While detailing the Merchandise Exports, the Finance Ministry noted
that during October 2021, export receipts increased marginally from
USD 287.27 million in September
2021 to USD 288.57 million about Shs1.022Trn.

In comparison between October 2021 and October 2020 shows a 27.2%
decline in export receipts largely due to no exportation of Gold in
October 2021.

“Uganda has not exported any Gold since July 2021 following the
imposition a levy of 5% on every kilogram of processed gold and 10% on
unprocessed minerals exported out of Uganda. Government and players in
the gold industry are still having negotiations to have this tax
revised downwards,” read in part the report.

However, the reactions from gold exporters, shows that the tax has
backfired with records from Bank of Uganda showing that as at June
2021, Uganda had exported gold to a tune of US$ 2.249Bn equivalent to
Shs7.969Trn.

However in 2020, the value of gold exports from Uganda was worth
Shs1.8Bn close to Shs6.376Trn, which indicates how lucrative the gold
sector is that prompted Government to tap into the resource.
In April 2021, Parliament agreed to impose 5% levy on each refined
kilogram of refined gold and a 10% levy on each kilogram of unrefined
gold exported out of Uganda.
The Ministry of Finance had initially proposed to Parliament amend the
Mining Act, 2003 to impose a USD200 export levy per kilogram on
processed gold and unprocessed minerals, however, this was rejected by
MPs who said the charge would be hard to implement and instead,
Parliament approved 5% for processed and 10% unprocessed gold exports.

The Performance of Economy report also detailed destination of exports
from Uganda with the East African Community (EAC) featuring to and the
region remained the main destination for Uganda’s exports, followed by
Africa and European Union came third.

The report further highlighted the worrying trend in growth of
Uganda’s trade deficit indicating that although Uganda exports in
November amounted to Shs1.022Trn, Uganda also imported goods worth
USD511.51 million about Shs1.814Trn was imported in October 2021 which
was lower than the USD 514.38 million in September.

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