The growth in the export of raw gold has seen the country fetch less revenue compared to when the mineral has been refined and exported, our source said.
“From what we are seeing, a lot of unrefined gold is being exported out of the country. We are losing a lot of tax revenue as a result of this,” the source lamented.
Furthermore, the source emphasized that such practices were casting a negative light on Uganda’s business environment. In exporting more raw gold, Uganda has backtracked on some of the gains it had made when the emergence of refined gold created a transparent industry and offered government officials enough data to tax and draft conducive policies for the players.
With the export of raw gold, some of which is transported as hand-luggage through the airport, Uganda is losing billions of shillings. The growth of unrefined gold exports now requires government to take quick intervention to restore order in the precious metals industry by, among other things, investigate why the trend has dramatically changed, conduct a thorough audit of the exporters, tighten regulations, and bolster enforcement efforts to ensure that everyone is playing by the rules.
Gold has emerged as Uganda’s main export, earning the country the much-needed tax revenue. Gold fetched Uganda at least $2.2 billion at the end of the 2020/2021 financial year, the highest ever. However, those numbers are likely to drop if the latest wave of exports of raw gold continues.
To limit the export of raw gold, the Gold Refiners, Exporters and Dealers Association (GREDA) recently handed Uganda’s government a gold-testing equipment worth Shs 240 million, which is expected to be stationed at Entebbe airport. The equipment is meant to trace smuggled gold.
On its own, the equipment cannot stop all the exports of raw gold, unless government makes an urgent intervention, some of the experts in the precious metals industry said.
“Government has to find a way of making it very expensive for one to export raw gold,” the expert said.
The issue appears to be around the five per cent tax on the export of raw gold, which the government of Uganda instituted at the start of the calendar year 2023. The tax issue has been contentious, which has locked in the ministry of energy, the attorney general, and some mineral dealers.
Even after the five per cent tax was introduced early this year, the ministry of energy issued an interim order stopping the Uganda Revenue Authority from collecting the taxes. It appears that mineral dealers are exploiting this uncertainty surrounding the export of raw gold out of the country.
Ultimately, the export of raw gold goes against the dreams and aspirations of President Yoweri Museveni, who has been a crusader of refining minerals in the country so that they can fetch a better price. Uganda instituted bans on the export of a number of minerals in order to support the mining industry.
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