Gold exporters to pay $200 in taxes for every kilogramme

Uganda’s gold exports have been rapidly growing in the five years. Photo | File

Summary

• The Bill, which has already been passed by Cabinet, is still before Parliament awaiting deliberations. It will apply to both gold and other minerals.
• Under the Bill, other unprocessed mineral exports will be subjected to a 1 per cent levy for every kilogramme.

By Dorothy Nakaweesi

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Gold exporters will be required to pay $200 or Shs740,000 for each exported kilogramme of the precious metal, according to the Mining (Amendment) Bill 2021.

The Bill, which has already been passed by Cabinet, is still before Parliament awaiting deliberations. It will apply to both gold and other minerals.
Under the Bill, other unprocessed mineral exports will be subjected to a 1 per cent levy for every kilogramme.

It is not clear how much government will be seeking to mobilise from the new levy but gold remains an important export and revenue earner to the government of Uganda.

According to data from Bank of Uganda, gold is Uganda’s leading export, contributing at least 44 per cent of total export volumes.
The Bill, which is part of a raft of tax mobilisation efforts by the Ministry of Finance, is expected to take off beginning July 2021.

Initially, government, through the Department of Geology, had been levying a charge of 10 per cent of the value of exported precious stones, among them gold.
It is not clear how the new levy will be accessed but the Bill indicates, exporters will have to pay the levies at the point of export after assessment by Uganda Revenue Authority.

Previously, Mr John Lwere, the Uganda Export Promotion Board, export executive, said exporters had been required to apply for an export permit from the Department of Geology, which would be used to assess the consignment before shipping.

Gold exports remain highly secretive and, apart from export volumes, little is known about the commodity.
However, some experts have previously indicated that much of Uganda’s gold exports are re-exports, especially from DR Congo.

Uganda’s gold export earnings for the past five years have been rapidly increasing, becoming the country’s largest export.
According to Bank of Uganda, cumulative gold exports between February 2020 and February 2021, stood at $2b (Shs7.6 trillion), which was at least 44 per cent of $4.57b total export earnings.
However, it is not clear how much of the exported gold was mined within  Uganda.

Gold exports have been growing, with earnings rising to $1.2b (Shs4.5 trillion) in the 2018/19 financial year, representing an export contribution of 30 per cent of the $4b (Shs15 trillion) total export revenue during the period.  
During the 2017/18 financial year, gold worth $476b (Shs1.7 trillion) was exported, growing from $418m (Shs1.5 trillion) that had been earned in the 2016/17 financial year.

Much of Uganda’s gold is exported to the Middle East, with United Arab Emirates taking the largest share.
 According to data from Bank of Uganda, between February 2020 and February 2021, Uganda exported goods worth $2.01b (Shs7.4 trillion). Of this, at least 99 per cent, which is an equivalent of $1.9b (Shs7.3 trillion), was gold.

What the bill seeks to achieve       
According to Sarah Opendi, the State Minister for Minerals, the Mining and Mineral (Amendment) Bill, seeks to reform and strengthen the legal, regulatory and institutional frameworks to cater for emerging issues arising in the minerals sub-sector, which include mineral traceability, certification, value addition, mineral revenue management and the formalisation of artisanal miners.

dnakaweesi@ug.nationmedia.com