The Uganda Revenue Authority (URA) has issued a directive to all airlines, instructing them not to accept any gold shipments from Uganda until exporters settle their outstanding tax arrears or make suitable arrangements to do so. This move comes amidst a longstanding dispute over taxes owed by gold exporters in the country.
In a communication sent via email on January 28, 2024, the URA notified airlines that no gold exports would be processed on that day until the outstanding tax obligations are resolved. The directive cited legal provisions under the East African Community Customs Management Act, warning against conveying unaccustomed goods.
The genesis of the dispute can be traced back to the proliferation of gold refineries in Uganda, with the sector experiencing significant growth since the establishment of the first state-of-the-art refinery in 2014. However, recent developments have highlighted challenges within the industry, including issues related to tax compliance and export regulations.
The increase in the number of gold refineries, coupled with rising competition, has led to pricing pressures, with refining costs dropping significantly. Additionally, the entry of new players, such as Simba Gold Refinery, has disrupted the market dynamics, leading to disagreements over business practices and compliance with government policies.
Simba Gold Refinery’s operating model, under a “Trans-Shipment License,” has raised concerns among industry stakeholders, as it operates differently from other refineries. This divergence in operating procedures has contributed to tensions within the sector, exacerbating the ongoing dispute over tax obligations.
Efforts to resolve the impasse have been complicated by disagreements within industry associations, with competing interests and divergent viewpoints hindering progress. Despite interventions from government authorities, including directives from President Museveni and the Ministry of Finance, the dispute remains unresolved.
The recent court ruling in favor of URA has further escalated tensions, prompting the tax authority to take decisive action to enforce the collection of outstanding tax arrears. As a result, only a select few companies, including THABA and Simba Gold Refinery Limited, are currently authorized to conduct gold exports, pending the resolution of the dispute.
The situation underscores the challenges facing Uganda’s gold export industry, highlighting the need for greater regulatory clarity, enhanced cooperation among industry stakeholders, and robust enforcement mechanisms to ensure compliance with tax regulations and export requirements. Until these issues are effectively addressed, the future of Uganda’s gold export sector remains uncertain.
