The government has retrieved about GH¢400 million from inappropriate transfers that multinational companies effected last year, a practice known as transfer pricing.
On December 31, 2018 alone, one of the companies paid $10 million (about GH¢50 million) which it admitted was transferred out of the country inappropriately, the Commissioner General of the Ghana Revenue Authority (GRA), Mr Emmanuel Kofi Nti, has revealed.
Transfer pricing in perspective
Transfer pricing occurs most often when multinational companies sell goods to divisions in other international jurisdictions. The system is laden with abuse because companies can deliberately pay higher prices for items or intermediary products they purchase from overseas-related parties.
When this happens, it increases the expenses of the local entities resulting in lower statutory payments such as taxes.
Documentation covering transfer pricing is monitored closely to avoid inappropriate documentation and abuse.
Ghana introduced transfer pricing regulations in 2012 (L.I. 2188), making the GRA aggressive in undertaking both desk and field transfer pricing audits.
The GRA also set up the Transfer Pricing Unit that stepped up on-site audits. As of January 2015, over 250 reviews (mainly desk audits) had been undertaken by the GRA.
Interacting with media practitioners in Accra last Thursday, Mr Nti who declined to disclose the names of the companies, said the Transfer Pricing Unit of the GRA which was set up not long ago found that the said company had transferred about $14 million out of the country illegally.
He mentioned that the Unit also retrieved about GH¢100 million from Vodafone Ghana Limited.
“The Unit was set up not long ago; as they perfect their acts we will see greater improvements,” he said.
The authority missed its 2018 revenue collection target of GH¢39.8 billion, falling short by GH¢2.17 billion as it collected GH¢37.63 billion or 94.5 per cent of the target.
Mr Nti described the inability of the authority to meet its target as unfortunate, but said the delayed implementation of the Electronic Point of Sales (EPOS) and resistance from the beverage industry against the implementation of the Excise Tax Stamp policy as some of the factors which negatively affected revenue collection performance.
“With regard to import duties and levies, the increase in goods imported into the economy through the suspense regimes and the impact of zero rated goods negatively affected performance,” he said.
For 2019, he said the GRA had been tasked to collect a tax revenue target of GH¢45.45 billion with discussions ongoing to review the target upwards in line with the government’s objective of a Ghana beyond aid.
To achieve the 2019 revenue target, Mr Nti said measures which would be pursued included stepping up activities to identify and plug revenue leakages.
He expressed the hope that the rollout of the EPOS devices in the course of the year would help address shortfalls in VAT collections, while the full implementation of the Excise Tax Stamp policy would bring on board the big industry players following the expiration of the deadline given to them to install affixing equipment.
The effective and full implementation of the Tax Identification Number (TIN) would broaden the tax net coupled with “regular and consistent visits to business centres by GRA staff and interns under the Nation Builders Corps.
The authority would also intensify compliance activities on rent tax and pursue industry specific measures to boost taxpayer compliance.
Mr Nti urged the public to offer information on non-compliant income earners, saying “GRA has an informants’ awards scheme that rewards informants with parts of the revenue or penalty collected.”