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February 24, 2024
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Experts accuse Gov’t ignoring advice on taxing gold

The mineral and extractives sector experts have expressed mixed feelings about the 10 per cent tax on gold. This follows the 5% tax on processed and 10% tax on unprocessed kilograms of gold as per the mining and minerals amendment act 2021 that takes effect in the next financial year.

Whereas sector players claim that the tax will decapitate the sector by discouraging investment, economists say the tax is low compared to the value of the commodity.

The 44.7 trillion budget discussion continues to take shape in the different sectors of the economy. In the budget for the next financial year, a tax of 5% and 10 % per kilogram of processed and unprocessed gold respectively was confirmed.

Patrick Katabaazi, an economist, says that “the levy is still low compared to the value of the commodity.”

However, Tom Nsubuga the chairperson of Uganda Miners Forum says the tax is unfair and may not steer investment in the extractives sector, they have disagreed.  

The demand for the Ugandan gold being inelastic with the markets mainly from middle east and United Arab Emirates, Uganda’s gold exports between Feb 2020 and Feb 2021 were 1.9b billion us Dollars approximately 7.3 trillion translating into at least 44% of the total export volumes

And to economists, the $2000 dollars per kilogram, would not allow Uganda to take the number one position in gold export but also boast Uganda’s domestic revenue.

During the 2017 /2018 financial year, gold worth 476 billion dollars which is about 1.7 trillion shillings was exported, growing from 418 million dollars (1.5 trillion) in 2016/17. And to allow for more growth, the extractive sector experts hold a contrary view.

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