President Museveni launching African Gold Refinery in 2017/courtesy photo
Uganda is counting losses after imposing taxes on gold exports, with exporters “refusing to export gold” in 2021.
According to 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 on gold exports came into effect in July 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,” the report reads in part.
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 US$1.8Bn (about Shs6.376Trn) which indicates how lucrative the gold sector is.
This prompted Government to tap into the resource by imposing taxes.
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 to 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.
According to Finance Ministry report, 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.
The Performance of Economy report also detailed destination of exports from Uganda with the East African Community (EAC) remaining the main destination for Uganda’s exports, followed by Africa and European Union.
The report further highlighted the worrying trend in growth of Uganda’s trade deficit indicating that although Uganda exports in October amounted to Shs1.022Trn, Uganda also imported goods worth USD511.51 million (about Shs1.814Trn) which was lower than the USD 514.38 million in September.
