By Frank Kamuntu
Parliament’s Committee on Commissions, Statutory Authorities, and State Enterprises (COSASE) has summoned Matia Kasaija, Minister of Finance, and Ruth Nankabirwa, Minister of Energy and Mineral Development, regarding regulatory lapses that led to the government missing out on Shillings 47 billion in gold tax revenues.
This action follows concerns raised by Auditor General John Muwanga in his December 2023 report to the Uganda Revenue Authority (URA). Muwanga faulted the URA for failing to collect taxes on 70,837.91 kilograms of gold exports, valued at Shillings 47 billion. According to the law, a levy of US$200, an equivalent of Shillings 749, 975 per kilogram of processed gold was supposed to be imposed.
Section 3(ii) of the Mining and Minerals (Export Levy and Refined Gold Regulations 2023) stipulates that gold exporters must pay US$200 per kilogram of gold to the URA at the time of export. These regulations were valid from July 1, 2021, to June 30, 2023.
However, after the regulations lapsed, the URA lacked the legal framework to collect the taxes. The Auditor General highlighted that this inability to collect taxes from gold exporters deprived the government of non-tax revenue (NTR) that could have financed other projects.
URA records indicate that gold exports weighed 30,189.71 kilograms in 2021/22 and 40,648.2 kilograms in 2022/23, totalling 70,837.91 kilograms.
Abel Kagumire, Commissioner of Customs at URA, explained to MPs that the lapse in regulations left URA without a legal basis to impose the gold tax. The Mining and Minerals Act 2022, which imposed a 10% levy on unprocessed minerals, did not clearly define processed and unprocessed minerals. Despite the initial instrument expiring in June 2023, it wasn’t until May 14, 2024, that URA received a new statutory instrument to resume gold tax collection.
“We informed the Auditor that we didn’t have an enabling law at that time,” said Kagumire. “The Mining and Minerals Act 2022 didn’t specify what is processed and unprocessed minerals. We were waiting for an enabling law, and that’s why the Commissioner General wrote to the Minister of Finance, who then wrote to the Minister of Energy and Mineral Development. We finally received the statutory instrument on May 24, 2024.”
Medard Sseggona, the Busiro East Constituency MP and COSASE Chairperson questioned, “For how long have people been exporting without paying taxes? We have had gold for as long as Uganda has existed, yet we haven’t been collecting taxes on our most precious mineral. Where were you?”
John Musinguzi, Commissioner General of URA, replied, “Our first correspondence on the matter was on June 26, 2023. We alerted the Minister of Finance that the statutory instrument would expire on June 30, but we didn’t receive a response.”
Sseggona then issued summons for the two ministers to explain the gold tax debacle. “Gold is a strategic mineral, and people are taking it for free because we aren’t selling gold; we only license extraction. We don’t know how much is extracted, only guessing when issuing licenses. We will invite the Ministry of Finance and the Ministry of Energy and Mineral Development.”
This is not the first time the two ministers have been implicated in gold tax issues. In October 2023, COSASE’s report on the December 2022 Auditor General’s report recommended holding the two ministers liable for negligence in establishing necessary regulations, resulting in a Shillings 340.56 billion loss in potential gold tax revenue. However, Parliament did not uphold this recommendation, faulting COSASE’s previous leadership for not providing a fair hearing to the ministers.
Allan Mayanja (Nakaseke Central) also questioned URA about the export of 22 mineral categories without tax assessment, highlighting a Shillings 72.49 billion declaration discrepancy noted by the Auditor General.
During the interface, Mpindi Bumali (PWD Representative) raised concerns about contradictory revenue figures from URA and the Accountant General. URA reported Shillings 27 trillion in revenue for 2022/23, while the Accountant General reported Shillings 25 trillion, accounting for a Shillings two trillion difference.
“We need a meeting with Parliament, the Accountant General, URA, and the Auditor General to resolve these discrepancies,” said Mpindi.
The Committee agreed to have technical teams from Parliament, the Accountant General, URA, and the Auditor General investigate the discrepancies before scheduling a meeting between URA and the Accountant General.
