Local News :

Home   >   News   >   General News   >   201704
Ghana's Oil & Gas Sector: ISODEC Campaigns Against Illicit Financial Flows
 
<< Prev  |  Next >>
 
28-Apr-2017  
Comments ( 0 )     Email    Print
       
 
 
 
 
Related Stories
 
Various estimates, from the Global Financial Integrity, ISODEC and the Tax Justice Network, and others, indicate that net financial outflows from Africa, considering development aid, amount to some US$41.3billion annually.

The country is losing billions of US dollars to transfer pricing, undervaluing of imports and overvaluing of exports, among others, and the merger of the various revenue agencies in 2009 under the Ghana Revenue Authority has failed to stem the tide, the Integrated Social Development Centre (ISODEC), has said.

Estimates by ISODEC and other partners, including the Finance Ministry, indicate, for example, that within a twelve-year period, between the year 2000 and 2012, Ghana’s export to the European Union was undervalued by €2.7billion, which is 14 percent of total value of exports to the EU.

At the same time, within the same period, Ghana’s import from the EU was overvalued by €2.8billion, which is 14percent of total value of imports from the EU.

The estimates show, also, that Ghana’s export to the US was undervalued by US$633million during the same period, which is 21percent of total value of exports to the US. On the import side, the country is estimated to have lost US$573million, which is 8percent of total value of imports from the US.

The civil society organization argues that there is little coordination and exchange of information among the various agencies under the Ghana Revenue Authority, which their amalgamation was meant to achieve, leading to huge revenue losses to the state.

To test the system at the Customs unit of the GRA, ISODEC staged the import of 53 pieces each of high definition video cameras, microphones and projectors, and came to the conclusion that by undervaluing the items by between 80 and 90percent, “the tax authority lost the chance to tax over hundred thousand dollars…”

At an engagement with Peace Fm on illicit financial flows, ISODEC also pointed to a case of transfer pricing in the oil and gas sector, saying Ghana lost “millions of dollars through transfer pricing in the Ghana Gas – SINOPEC transaction,” which is the Western Corridor Gas Infrastructure Project.

“While it is comforting that the TP [Transfer Pricing] unit of the GRA has so far retrieved over GH¢ 10million in additional taxes and penalties raised as a result of its ongoing audit of the transaction, it is feared that without addressing the identified institutional lapses, Ghana risks more devastating hemorrhage of critically needed revenues to finance its development commitments under the SDGs,” ISODEC noted.

The Campaign Coordinator of ISODEC, Dr Steve Manteaw, maintained that one of the surest ways to reduce or stop illicit financial flows (IFFs) in Ghana is to forbid tax havens amongst multinational organizations.

Transparency provides the cover for various types of manipulations or systems that lead to the erosion of profits that could be taxed by host governments,” he said.

“A company could be making huge sums of money in terms of profit in this country but they find ways, sometimes, through over inflated professional fees and transfer mispricing, to move these monies that should have been taxed into tax havens, where they enjoy protection because of the secrecy surrounding those banking activities.”

“That is why we are asking for the demolition of tax havens so we are able to track all monies that are being made and we will be able to tax them appropriately,” he told Peace News’ reporter Deborah Agyei Amponsah in an interview.

His proposition is one of many that ISODEC and its partners are making after conducting research on transfer pricing in Ghana’s oil and gas sector, as well as commodity exports and imports.

Other recommendations include the introduction of IT-mediated solution, a kind of intranet that links up the various divisions, departments and units of the GRA, to help them monitor in real time, the various transactions that take place in a day.

Another recommendation is the shifting of tax mix away from profit taxes (where developing countries like Ghana currently do not have the capacity to manage) toward less pricing-manipulating taxes like production-based taxes such as royalties, which are easier to administer.

ISODEC also urged government to design, implement, monitor and evaluate a real-time model for tracking and eliminating trade mis-pricing in commodities and train and resource the tax authority to implement same.

 
 
 
 
Source: Deborah Agyei Amponsah/ Peacefm
 
 

Comments ( 0 ): Post Your Comments >>

 
 
 
Disclaimer: Opinions expressed here are those of the writers and do not reflect those of Peacefmonline.com. Peacefmonline.com accepts no responsibility legal or otherwise for their accuracy of content. Please report any inappropriate content to us, and we will evaluate it as a matter of priority.