Govt Scraps Royalty Tax on Gold to Curtail Smuggling

President Yoweri Museveni has said that government will scrap off royalty tax on gold in a bid to reduce the smuggling of the mineral and facilitate value addition.

The President revealed this on Monday while commissioning African Gold Refinery (AGR) in Entebbe. This USD 20 million gold and silver processing facility is the first gold refinery to be established in Sub Saharan Africa.

He criticized individuals and wrong policies that are sabotaging the manufacturing industry saying “we are going to be very harsh on them”

“The problem with gold in Africa is smuggling. Gold is not like matoke that you will see somebody carrying it and tax them, symptoms ” Museveni said.

“Apparently there’s some stupid tax called royalty and I am going to remove it. Even those who are in transit will be exempted from tax, prescription ” he added.

The Mining Act 2003 of Uganda stipulates that royalties will be shared with mineral producing districts based on a basic revenue sharing schemes. The central government takes 80% of royalties collected and then distributes the remaining 17% to local governments and 3% to landowners or bona-fide occupants of land subject to mineral rights.

“There will be no excuse for people not to bring gold to the refinery. The artisans must record whatever they are getting however small it is, about it ” Museveni said.

Museveni cited the case of Mubende where the small scale artisans were opposed to paying royalty tax claiming that taxes suited foreign investors. He further warned small scale artisans against stopping prospective investors.


“They (artisans) went to the extent of stopping prospective investors from looking for the bigger gold. We need such investors since they have the machinery and capacity to dig up to the bigger deposits of gold.”

According to the Auditor General’s report for 2016, government lost at least Ush 4.4 billion in uncollected mineral royalties in the last five years.

Museveni on Monday said that the main focus shouldn’t be on taxes but rather foreign exchange and direct employment which will in turn bring in the taxes. “Once young people are employed, we shall get the tax indirectly because they will later go to the bars to drink.”

Earlier, the Energy Minister Irene Muloni who also attended the launch had said that government was reviewing regulations so as to attract private investors.

“Government has provided the manufacturing under bond facility which will help the licensed traders and impotoers to supply gold to the refinery for refining and export free of taxes,” Minister Muloni said.

This, along with other amemdments in the Mining policies, she said will facilitate competitiveness of the refinery to attract gold from both local and international traders.

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