Mpuuga’s motion emerged from the debate on the statement on taxes on gold exports presented by the Minister of Energy and Mineral development, Hon. Ruth Nankabirwa during the sitting of the House chaired by Deputy Speaker, Thomas Tayebwa on Tuesday, 25 April 2023.
Mpuuga proposed that once instituted, the Select Committee should investigate circumstances under which the statutory instrument was issued, consider agreements between Uganda Revenue Authority (URA) and gold exporters that were not tabled on the Floor of parliament and also considers matters attendant to the minerals industry.
Mpuuga said that the agreement between the gold exporters and the Uganda Revenue Authority was not been tabled in Parliament.
“Having listened to the honorable Minister’s statement and attendant responses, that the House considers a motion to constitute a select committee to consider the circumstances under which the Minister by statutory instrument waived government taxes from Shillings 616 billion to Shillings 43 billion,” Mpuuga said in part. Thirty-six legislators voted in favor of the motion while 28 voted against it.
The Select Committee, once instituted, will investigate the circumstances under which the statutory instrument was issued, consider agreements between Uganda Revenue Authority (URA) and gold exporters that were not tabled on the floor of parliament, and also consider matters attendant to the minerals industry.
“Aware that the country is grappling with revenue challenges and now that we are in budget period, I beg that, with your indulgence and this rule, that this motion is taken and considered. I beg to move,” he said.
Last week, Parliament’s Finance Committee recommended an inquiry into the circumstances that led to the writing off of accumulated gold export revenue and the implications of the current legal provision on the resource mobilization potential for the country.
The committee also recommended that the Uganda Revenue Authority should undertake to collect all tax arrears due from the export of gold following the enactment of the Mining and Minerals Act 2022.
The Mining Act, of 2021 imposed an export levy for processed gold at a rate of 5 percent of the value of the exported Gold. The total value of exported gold for the period from 1st July 2021 to 3rd March 2023 was 12.49 trillion, resulting in tax arrears at 5 percent of 616.54 billion Shillings.
The gold export companies responsible for the tax arrears are FARU 755.1 million, Simba 35.73 billion, Bullion 215.56 billion, Metal Testing 164.13 billion, AGR 24.76 billion, Thaba 99.19 billion, and Aurnish 76.43 billion.
The Mining Act, 2021 was later repealed in 2022 following the enactment of the Mining and Minerals Act 2022, which also provided for the export levy on gold exports. The Act gave powers to the Minister of Energy and Mineral Development to issue statutory instruments gazetting the applicable rate for the gold export levy.
On 1st March 2023, the Minister published in a gazette, Statutory Instrument imposing an export levy on processed gold exported out of Uganda at a rate of US Dollars 200 per Kilogram.
The Committee raised concern that the Minister by statutory instrument gazetted a significantly low tax of US Dollars 200 per kilogram instead of the 5 percent of the value of each processed kilogram of gold exported.
The effect of this statutory gazette is that the tax arrears due for collection by Uganda Revenue Authority URA reduced to 43 billion from 616 billion.
However, Hon. Nankabirwa said that the statutory instrument was to collect arrears of outstanding export levy on gold and not to write off gold tax arrears.
“It was recognized that there were already outstanding unpaid arrears from 01 July 2021 owed by gold refiners and exporters which they had already committed to pay under the indemnity agreements.”She said.
Therefore, a statutory instrument was necessary to collect the arrears accumulated during the period,” she added.
She said that this is when the minister duly made the Mining and Minerals (Export Levy on Refined Gold) Regulations, 2023 to collect the outstanding arrears from 01 July 2021 to 30 June 2023 and lapse thereafter.
Hon. Nankabirwa said that URA duly issued Demand Payment Notices to collect the levy but some gold refiners made a complaint against the same and filed a suit in court where an interim order has been issued.
“ln order to provide clarity and further engage the entire industry to enable seamless implementation, the minister wrote to the URA to request that implementation is halted until further guidance is provided,” she said.
During the debate, several Members of Parliament expressed shock over the manner in which gold refiners and exporters have been getting tax exemption based on a presidential directive.
Butambala County MP, Hon. Muwanga Kivumbi demanded that the minister before the House a copy of the presidential directive.
“Directives of the President are always in written form. Many times, when we are losing money, ministers come and say they were under instruction from the President. We would have expected you to lay on table that directive. This is connivance”, he added.
Erute County South MP, Hon. Jonathan Odur said that the powers to the minister are to make regulations on levies, fees and charges but does not provide for waive of tax arrears.
“If you made any instrument on tax arrears then that instrument is defective from the onset and you exercised powers that you did not have. So, we cannot accept it as Parliament,” he said.
He added that the requirement for a statutory instrument is that it must come back to the House and be subjected to supervision.
“When this House gives you authority to make a statutory instrument, you come and lay it either for information, approval or ratification. You cannot make an instrument because it is only Parliament that has powers to make laws in this country”, he said.
Dokolo District Woman Representative, Hon. Cecilia Ogwal said it is the responsibility of the minister and the Attorney General to advise the President accordingly.
She called for to the cancellation of the statutory instrument so that the money already earned in post-dated cheques by the companies would be used for other purposes.
Tayebwa noted that the House’s concern was that the instrument issued by the Minister amended the tax rate retrospectively.
“What I pick from your statement and the concern of the House is very simple. Parliament passes a law providing for 5 percent, the refineries complain, when they complain…you go as government and agree internally to first hold it and see a way forward.
After you bring a law and we amend but in the process, you issue a statutory instrument that reduces the rate from 5 percent to 200 retrospectively. This is what colleagues are concerned about,” said Tayebwa.
