Parliament to investigate energy minister over sh573 billion gold tax waiver

Kampala, Uganda | THE INDEPENDENT | Parliament has resolved to investigate the circumstances under, which the Minister of Energy and Minerals waived tax payment of  sh573 billion in gold exports.

The motion, moved by the Leader of Opposition (LOP), Mathias Mpuuga on Tuesday, called for the formation of a select committee to investigate the matter.

“Having listened to the honorable Minister’s statement and attendant responses, that the House considers a motion to constitute a select committee to consider the circumstances under which the Minister by statutory instrument waived government taxes from Shillings 616 billion to Shillings 43 billion,” Mpuuga said in part.  Thirty-six legislators voted in favor of the motion while 28 voted against it.

The Select Committee, once instituted, will investigate the circumstances under which the statutory instrument was issued, consider agreements between Uganda Revenue Authority (URA) and gold exporters that were not tabled on the floor of parliament, and also consider matters attendant to the minerals industry. “Aware that the country is grappling with revenue challenges, and now that we are in the budget period I beg that this motion is taken and set up a select committee,” he said.

Last week, Parliament’s Finance Committee recommended an inquiry into the circumstances that led to the writing off of accumulated gold export revenue and the implications of the current legal provision on the resource mobilization potential for the country. The committee also recommended that the Uganda Revenue Authority should undertake to collect all tax arrears due from the export of gold following the enactment of the Mining and Minerals Act 2022.

The Mining Act, of 2021 imposed an export levy for processed gold at a rate of 5 percent of the value of the exported Gold. The total value of exported gold for the period from 1st July 2021 to 3rd March 2023 was 12.49 trillion, resulting in tax arrears at 5 percent of 616.54 billion Shillings. The gold export companies responsible for the tax arrears are FARU 755.1 million, Simba 35.73 billion, Bullion 215.56 billion, Metal Testing 164.13 billion, AGR 24.76 billion, Thaba 99.19 billion, and Aurnish 76.43 billion.

The Mining Act, 2021 was later repealed in 2022 following the enactment of the Mining and Minerals Act 2022, which also provided for the export levy on gold exports. The Act gave powers to the Minister of Energy and Mineral Development to issue statutory instruments gazetting the applicable rate for the gold export levy. On 1st March 2023, the Minister published in a gazette, Statutory Instrument imposing an export levy on processed gold exported out of Uganda at a rate of US Dollars 200 per Kilogram.

The Committee raised concern that the Minister by statutory instrument gazetted a significantly low tax of US Dollars 200 per kilogram instead of the 5 percent of the value of each processed kilogram of gold exported. The effect of this statutory gazette is that the tax arrears due for collection by Uganda Revenue Authority URA reduced to 43 billion from 616 billion.

However, in her statement to parliament, Minister Ruth Nankabirwa said that the statutory instrument was to collect arrears of outstanding export levy on exported gold and not to write off gold tax arrears. She added that a statutory instrument was necessary to collect the arrears accumulated during the period from 1st July 2021.

“It was recognized that there were already outstanding unpaid arrears from 1st July 2021 owed by gold refiners and exporters which they had already committed to paying under the indemnity Agreements. Therefore, a statutory instrument was necessary to collect the arrears accumulated during the period from 1st July 2021. Led by the Ministry of Finance, the relevant stakeholders were consulted including the Ministry of Energy and Mineral Development, Attorney General’s Chambers, URA, and gold refiners and exporters whose input informed the rate of export levy,” reads part of the Minister’s statement.

Relevant stakeholders, including the Ministry of Finance, the Ministry of Energy and Mineral Development, Attorney General’s Chambers, URA, and gold refiners and exporters, were consulted to inform the rate of export levy. URA duly issued Demand Payment Notices to collect the levy, but some gold refiners made a complaint against the same and filed a suit in court where an interim order has been issued. Nankabirwa stated that to provide clarity and further engage the entire industry to enable seamless implementation.

“The Minister wrote to the URA to request that implementation is halted until further guidance is provided,” she said. However, several MPs disagreed with the Minister’s statement and demanded a further inquiry into the matter. The Shadow Minister of Finance Muwanga Kivumbi insisted that after the statutory instrument, the arrears were reduced to Shillings 43 billion of which only 3 billion had been collected. “The instrument of the Minister effectively wrote off the arrears,” said Kivumbi.

Tayebwa noted that the House’s concern was that the instrument issued by the Minister amended the tax rate retrospectively.

“What I pick from your statement and the concern of the House is very simple. Parliament passes a law providing for 5 percent, the refineries complain, when they complain…you go as government and agree internally to first hold it and see a way forward. After you bring a law and we amend but in the process, you issue a statutory instrument that reduces the rate from 5 percent to 200 retrospectively. This is what colleagues are concerned about,” said Tayebwa.

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