URA struggles to trace Uganda’s gold

KAMPALA. Uganda can track billions of dollars’ worth of gold leaving the country, but its tax authority says it cannot reliably establish how much of the precious metal is produced locally or where refiners obtain the gold they export.

The gap in the gold trail is raising concerns about tax collection, regulation and the country’s ability to account for one of its biggest export earners.

Lawrence Muwonge, the Uganda Revenue Authority (URA) manager responsible for extractives, said the biggest challenge starts at the mining sites, where much of the gold is produced by artisanal miners operating outside formal production and record-keeping systems.

He said the authority cannot reliably determine how much gold an individual artisanal miner produces, sells or to whom it is sold.

“Even just to know what he has sold in a day or what he has produced in a day, it is next to impossible,” Mr Muwonge said.

Monitoring every mining site continuously would require officials to be present day and night, which he said was impractical.

The problem continues up the supply chain.

While refiners operate from identifiable premises and their exports can be tracked, Mr Muwonge said establishing the source of the gold they process remains difficult.

“We can track their figures in exports. The Bank of Uganda can report them. But when it comes to a refiner telling you from whom they buy gold, it is next to impossible,” he said.

He questioned the commercial logic of some transactions reported by refiners, citing cases where a company claimed to have bought and sold gold at the same value despite incurring operating costs.

“The refiner is one person who will tell you, I have bought gold of $10. I have sold gold of $10, which mathematically cannot work out,” Mr Muwonge said.

He said it is therefore difficult for URA to establish the source of gold, the price paid to suppliers and the ultimate beneficiaries of the trade.

The concerns are reflected in Uganda’s latest Extractive Industries Transparency Initiative (EITI) report, which highlights gaps and discrepancies in reporting across the extractive sector.

The fifth Uganda EITI report, covering the 2023/24 financial year, shows that 20 extractive companies were included in the reconciliation exercise. Only 13 submitted reporting templates, while seven did not.

The non-reporting companies accounted for Shs31.9 billion, or three per cent of the extractive revenues covered by the exercise.

Corporate reporting was an even bigger concern. Only four of the 20 companies submitted signed reporting templates, while the 16 companies that did not sign accounted for Shs645.2 billion, representing 98.5 per cent of the reconciliation scope.

Gold provides perhaps the clearest illustration of the challenge.

According to the EITI report, URA records for 2023/24 showed about 46,263 kilogrammes of gold exports valued at approximately $2.98 billion.

Bank of Uganda records for the same period put exports at about 48,620 kilogrammes, valued at approximately $3.09 billion.

That leaves a difference of about 2,357 kilogrammes between the figures reported by the two government institutions.

The EITI report also records differences between quantities of gold reported as imported and exported by some companies.

For example, Thaba Investments reported imports of 12,377,803 kilogrammes against exports of 12,657,815 kilogrammes, while Simba Gold Refinery reported imports of 7,619,029 kilogrammes and exports of 7,798,408 kilogrammes.

Metal Testing and Smelting reported imports of 6,454,565 kilogrammes compared with exports of 6,881,358 kilogrammes.

The figures, however, should not automatically be interpreted as evidence of missing gold because the EITI table does not explain the transactions, timing differences or adjustments behind the reported figures.

Beyond data discrepancies, URA is also concerned about who actually controls some mining operations.

Mr Muwonge said officials have encountered mines that appeared to be owned by Ugandan companies but where foreign nationals were allegedly operating behind the scenes.

He cited an operation in western Uganda where URA found more than 50 excavators and numerous Chinese expatriates, despite the company appearing to be Ugandan-owned.

In another case in northern Uganda, he said officials found more than 60 Chinese nationals at a mining camp, although the company had declared that only three expatriates were employed.

The question of beneficial ownership is important because it determines who is responsible for production, taxation and compliance.

Although Uganda requires companies to disclose beneficial ownership information when they are registered, Mr Muwonge said some mining operators remain difficult to trace after tax assessments.

The problem is compounded by the involvement of several government agencies in the mineral value chain.

The Directorate of Geological Survey and Mines licenses and monitors mining operations, URA collects taxes, Bank of Uganda records foreign-exchange transactions, while other agencies hold company, trade and ownership information.

Mr Muwonge said these institutions do not always share information effectively.

“In the past, the actors in managing or in administering revenue collection in the mining sector, that is the ministry and the URA, you find each of them want to shine at their own,” he said. “The URA wants to shine. The DGSM wants to shine.”

He said production, licensing and taxation should instead be treated as connected processes.

The tax authority is also questioning whether the current gold taxation regime captures the rising value of the commodity.

Mr Muwonge said gold was not attracting a royalty under the regime he was discussing, while the export levy stood at $200 per kilogramme.

He described the fixed levy as a policy gap because it does not increase with the international price of gold.

The wider concern is therefore not simply how much gold Uganda exports, but whether the country can establish a reliable chain of accountability from extraction to export.

“Artisanal mining, as I said earlier, has improved the livelihoods of so many communities, but when it comes to taxation, we have got so many problems,” Mr Muwonge said.

The EITI process is intended to improve transparency in the extractive sector, but the latest findings suggest that stronger data sharing, identification of beneficial owners and reconciliation of production, exports and tax payments remain necessary.

For Uganda, the challenge is increasingly clear: the country can see enormous amounts of gold leaving its borders, but government still struggles to establish exactly how much is produced, who produces it, who supplies refiners and how much revenue is due to the public.