Uganda Loses $58m Annually In Unpaid Royalties, And Taxes From Gold Exports

 By PATRICK JARAMOGI                           

KAMPALA, Uganda: |SHIFTMEDIA| Statistics from Uganda’s tax authority revealed that in 2019, the country exported gold worth USD$1.3b compared to the USD$549m exported the previous year and yet over a fifth of the population still lives below the national poverty line, according to the World Bank.

Although gold is the country’s largest export product by value according to Uganda Revenue Authority, the government refuses to publicly divulge how much the region’s largest gold refinery, Africa Gold Refinery (AGR) that exports 75% of this precious metal is paying in tax.

According to Ms. Doris Akol (below), the out-going Commissioner General at the Uganda Revenue Authority (URA), “in the financial year ending June 2019, gold exports amounted to UGX. 4.1 Trillion (US$1.3billion). This is composed of both locally mined and that one imported for manufacturing under bond / inward processing.”

Akol declined to give any figures regarding how much taxes are paid by AGR, “with regard to the taxes, it’s a consolidation of applicable taxes that AGR pays, unfortunately, we are not at liberty to disclose taxpayers data,” she said.

According to information from civil society organisations (CSOs), allegations are that AGR neither pays royalties or taxes to the Ugandan Government due to the exemptions granted by the President when he opened the USD20m facility in 2014.

The CSOs are now pressurizing government to come clean on this and start taxing AGR.

M/s Marlon Agaba the Communications Manager, Uganda Anti-Corruption Coalition disclosed that there is still lack of transparency regarding tax collected in gold exports from Uganda.

“There is no evidence of payment of royalties, and taxes on the gold exported by AGR. This implies that Uganda lost revenues ranging from $3.39 million to $16.95 million in royalties and taxes,” he said.

According to URA, AGR exported gold worth USD975m in 2019 and, this means they would have paid taxes worth $58.5m (5%) and royalties worth $9.75m (1%) if it wasn’t due to the tax exemption.

This type of tax exemption, while legal, is considered by many Civil Society activists like Jane Nalunga, the Country Director for South and Eastern Africa Trade Information and Negotiation Institute (SEATINI) Uganda as a form of Illicit Financial Flows.

“Such exemptions by the government doesn’t only deprive Ugandans of money needed for development from their natural resources but also fuels IFFs, and our government hasn’t done much to curb Illicit Financial Flows,” said Nalunga during a recent dialogue.

According to a Global Financial Institute, 2018 report titled: “A Scoping Study of Illicit Financial Flows Impacting Uganda”, insufficient levels of financial transparency-globally and domestically-and government accountability in Uganda, coupled with a regulatory system that can incentivize financial crimes, are helping to drive high levels of illicit financial inflow and outflows in the country, which are undermining development efforts.

Though the GFI report states that Uganda has relatively well developed anti-IFFs institutions, laws, and strategies their impact is limited in the absence of political will and public support.

The government appears to be digging in its heels on their tax revenue secrecy stance even after revelations by the Global Witness Report in 2017 that AGR was not paying taxes on gold exported, due to tax exemptions. Statistics from customs indicate that AGR exports 75% of the gold from Uganda.

The Governor Bank of Uganda, Prof. Tumusiime Mutebile said in an interview that records at Bank of Uganda show that only 10% of the gold exports is mined locally. He said AGR has so far exported over 30 tonnes of gold to Dubai and Belgium since 2014.

The Global Witness reports states that AGR is run by a small group of Belgian and Ugandan businessmen, including former government minister Richard Kaijuka, who are allegedly managing to ship hundreds of millions of dollars’ worth of gold out of Uganda without disclosing its origin and paying no tax in the process. When contacted for a comment, Sir, “Rich” Kaijuka declined to comment.

When contacted for a comment regarding allegations of tax evasion and exemption as per the Global Witness Report, Allan Goetz Chief Executive Officer of AGR denied the allegations. “It is not true that we don’t pay tax,” he said. Adding; “When the President commissioned our plant in 2014, he gave us a tax holiday and exemption for 10 years (until 2024). So we shall start paying any tax or royalties after the expiry of the 10 years,” he clarified further.

Goetz noted that AGR pays taxes in form of Pay As You Earn (PAYE) that is deducted monthly from the salaries of its 180 employees.

The Senior Presidential Advisor Ms. Tereza Mbire said in an interview: “President Museveni made a commitment to waive taxes on gold produced in and transiting through Uganda so as to prevent smuggling of unprocessed gold and promote the refinery. As for AGR, they are also exempted from any Royalties and taxes for up to 10 years.”

Sydney Asubo, the Executive Director Financial Intelligence Authority (FIA), said the increase in recorded gold exports was due to the curb on gold smuggling. “The fact that gold is now our number one export earner points to aspect of contained gold smuggling out of Uganda,” he said in an interview.

 

This story was produced by www.shiftmedianews.com It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation in partnership with the Institute for the Advancement of Journalism. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.