Over the past three years, from 2016 to 2018, discrepancies resulting from revenue under reporting by the downstream petroleum industry amounted to a total loss of about GHc 1.2 billion to government in tax revenue.
This has been a result of disagreements in the reported tax receipts as against the Ghana Chamber of Bulk Oil Distributors (CBOD) expected tax receipts, which were computed based on official National Petroleum Authority (NPA) volumes and adjusted by GRA’s reported exemptions and Ministry of Finance’s (MoF) approved variations.
In view of this, the Chamber is calling on government to take radical steps to pursue all lost revenue and prosecute every culprit suspected of petroleum tax evasion.
The discrepancies remain unexplained by the Ghana Revenue Authority (GRA).
The unexplained under-reporting of petroleum taxes persisted in 2018. The under-reported taxes increased by GHc 54.31million in 2017, compared to 2016, marking a 16 percent increase. However, the rate of increase slowed in 2018 to 10 percent over the level of unreported taxes for 2017.
The Road Fund Levy was the largest under-reported tax or levy for the period 2016 to 2018.
Apart from the problem of under-reporting of tax receipts, GRA has also faced challenges of meeting its petroleum sector tax targets, as handed to it by the Ministry of Finance.
Based on 2018 tax revenue projections, the GRA was expected to collect GHc 39.8 billion, but actual collections were about GHc 2.2 billion short, representing 5.46 percent below target.
Of the 19 tax types meant to be collected, six – PAYE, Corporate tax, NFSL, Domestic GETFund Levy, Special Petroleum Tax (SPT) and the Energy Debt Recovery Levy (EDRL) – exceeded GRA’s revenue target.
Corporate tax collections were particularly strong, with actual collections surpassing the target by GHc 1.33 billion (18.89 percent). NFSL also performed well, exceeding the target by 31.10 percent (GHS 74.53 million).
Import VAT and import duties and levies performed especially badly, with shortfalls of GHc 980.51 million and GHc 1,764.81 million, respectively. As a share of the target, other direct taxes, – which include rent tax, management and technical service fees, and stamp duty, experienced the biggest shortfall: actual collections were 46.17 percent lower than expected. Excise Tax also performed poorly, with a shortfall of 30.95 percent.