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Uganda: Government axes gold tax not wanting to lose central role in trade

By Musinguzi Blanshe
Posted on Tuesday, 12 October 2021 18:09, updated on Thursday, 14 October 2021 12:04

An employee uses a hammer to clean a gold ingot during the refining process at AGR (African Gold Refinery) in Entebbe, Uganda, October 4, 2018. AFRICA-GOLD/REFINERIES REUTERS/Baz Ratner

When Uganda's President Yoweri Museveni launched a gold refinery in 2017, he abolished tax for gold royalties to encourage its flow into the country, which worked. But in July, the government introduced a new tax on processed and unprocessed gold. Now, gold traders refuse to pay the tax, and have thus withheld all gold that would have been exported in previous months. Given that gold is not mined in Uganda but is brought in or smuggled in from neighbouring countries, abandoning the tax could be seen as a nod to the illicit gold trade.

“I am going to remove that royalty. You were scared of the tax but now we have removed it. The royalty for those in transit has also been removed,” Museveni had said in February 2017, as he launched the Africa Gold Refinery: a $20m investment by Alain Goetz, a Belgian gold dealer. “There will be no excuse for anybody not to bring their gold to the refinery.”

Royalties were entirely removed. However, a tax on gold exports remained: 5% tax on local and 1% on smuggled or imported gold. Museveni’s royalty removal order came amid a gold export boom. The country exported gold worth $339m in 2016 from a paltry export worth $35m the previous year.