Gold Refinery Hit with Heavy Tax Penalty – The Ankole Times

Gold Refinery Hit with Heavy Tax Penalty

Monday, September 25, 2023
Bullion Refinery Ltd has been ordered to pay a substantial tax bill, following a series of disputes arising from URA's audit and re-characterization of the company's financial transactions.
Hope Turyomurugyendo
3 Min Read

In a recent decision by the Tax Appeals Tribunal, a gold refinery company, Bullion Refinery Ltd, has been instructed to pay more than UGX 500 million in taxes to the Uganda Revenue Authority (URA). This includes Value Added Tax (VAT) and income taxes. The three-panel tribunal, led by Dr. Asa Mugenyi, also ruled that the company must cover the legal costs associated with the case.

The Tribunal’s orders specified that Bullion Refinery Ltd should pay UGX 353,106,000 in income tax and UGX 211,863,360 in VAT. An additional VAT amount of UGX 1,512,479 was imposed due to the use of different exchange rates.

This dispute arose from a URA audit conducted between February 2018 and June 2019, which revealed income tax discrepancies of over UGX 486 million and VAT assessments exceeding UGX 200 million. These issues stemmed from the re-characterization of the gold refinery company’s loan as income.

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The audit also uncovered undeclared sales attributed to under-declared refinery charges and the forceful registration of VAT by URA. It was noted that the company’s refining charges, ranging from $10 to $20 per kilogram, were below the industry average, which was determined to be $50 per kilogram based on two other industry players.

Furthermore, the audit identified a loan balance of more than UGX 1.1 billion in the gold firm’s financial statement as of June 30, 2019, without supporting documentation. Loan amounts of over UGX 951 million for Financial Year 2017/2018 and UGX 225 million for Financial Year 2018/2019 were also re-characterized by URA.

During the hearing, Mr. Richard Karumuna, the director of the gold refinery company, argued that the loan was obtained in April 2016 for the purpose of procuring refining equipment from Top Straight-line General Trading LLC in Dubai. He defended the company’s cost-effective refining methods, which aimed to make gold refining more affordable to customers.

However, the tribunal upheld URA’s stance, stating that URA was justified in considering the unexplained sums as undeclared income and therefore taxing them accordingly. The tribunal’s final verdict held the gold refinery company accountable for income tax on the re-characterized, unsecured loans.

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Hope Turyomurugyendo has a pivotal role as the Jobs and Tenders Notices Publisher at The Ankole Times. She is driven by a passion for connecting job seekers, entrepreneurs, and businesses with valuable opportunities in Uganda.
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