In a recent legal development, three gold refinery companies—Bullion Refinery, Aurnish Trading Ltd, and Metal Testing and Smelting Co Ltd—have faced a setback in their attempt to secure a temporary injunction from the High Court in Kampala. The aim was to halt the Uganda Revenue Authority (URA) from collecting taxes from them.
Registrar Kintu Simon Zirintusa of the Civil Division of the High Court in Kampala, in his ruling on January 12, dismissed the application filed by the aforementioned gold companies. He asserted that URA possesses the capability to refund any taxes that might have been unlawfully collected if the final decision in the main case supports such a refund.
“Basing on the evidence on record and submissions of both parties, since the respondents (URA and the Attorney General) have demonstrated that the inquiry being complained of in the instant application is monetary in nature, the second respondent (URA) is a government agency charged with the collection of revenue. Taxes are creatures and there are procedures for the refund of any taxes overpaid or wrongly paid which the applicants can explore in the event this honorable court decides the main suit in their favor,” ruled registrar Kintu.
He added, “Or if the second respondent (URA) collects revenue and the court finds that such revenue shouldn’t have been collected, the second respondent has the capacity to refund any revenue erroneously collected. On the other hand, other gold refineries are paying the tax, and granting the application would cause a grave inconvenience to the respondents (URA).”
The application was consequently not granted based on the aforementioned reasons.
Background: According to court records, the three companies specialize in dealing with imported gold, which is brought into Uganda for processing and subsequent exportation.
In their application, the companies argued that Section 172 (1), (2), and Article 23 of the East African Community Customs Management Act, 2004, and the Protocol on the Establishment of the East African Community, to which Uganda is a signatory, prohibit the payment of imported duties and taxes on goods brought into customs territory for processing and subsequent exportation. The gold refineries further contended that a similar law imposes an export levy on gold imported into Uganda intended for processing and subsequent exportation.
The Attorney General, in response to the application, contended that in 2022, the government sought to tax gold exports, and a fee was agreed upon with the gold traders. This fee included $200 (about Shs760,000) per kg of processed gold and 1 percent on the value of unprocessed gold.
The government also introduced the Mining Amendment Bill, 2021, which included provisions for a levy on the exportation of gold. Parliament, however, disagreed with the initially proposed levy rates and instead imposed a 5 percent levy on the value of processed gold and a 10 percent levy on the value of unprocessed gold. This amendment was signed into law by President Museveni, giving URA the authority to commence collecting taxes on the export of gold from July 1, 2021.
Following the enactment of statutory instrument no. 22 of 2023, the tax body sought to collect tax arrears and issued demand notices to each of the refineries that had exported gold during the period starting July 1, 2021.
The Attorney General argued that the gold refineries were aware of their substantial tax liability in arrears but chose to break away from the association that insisted its members should pay the agreed-upon arrears.
As of now, it remains uncertain when the main suit filed by the aggrieved three gold refinery companies will be scheduled for a hearing to address the pending issues.
