The Ghana Revenue Authority has, according to the 2018 Auditor General’s report, granted tax exemptions and waivers to some companies, costing the nation about GHc5.6 million with the action contravening Parliament’s authority as the only entity to grant and approve exemptions and tax waivers.
Article 174 of the Constitution requires that no taxation shall be imposed other than by or under the authority of an Act of Parliament.
Where an Act enacted in accordance with Clause (1) of Article 174, confers power on any person or authority to waive or vary a tax imposed by that Act, the exercise of the power of waiver or variation, in favour of any person or authority, shall be subjected to the prior approval of Parliament by resolution.
However, the Auditor General noted in its report that the system for tax waiver was fraught with some irregularities.
It says, “our examination of records at GRA showed that some companies without any Parliamentary approval were exempted from the payment of duties and taxes.
Instructively the report noted that Red Sea Housing Services (GH) Ltd, a free zones company, sold prefabricated housing units to five companies without the payment of duty and taxes (though exemption letters from the GRA/Customs Division were attached to some declarations) and without Parliamentary approval.
The five companies accordingly incurred a cost insurance and freight value (CIF Value) of GHc149,824.58 for Gold Fields GH Ltd, GHc 581,091.06 for Newmont Gh. Gold Ltd, GHc 1,031,907.80 for Newmont Golden Ridge Ltd, GHc 2,438,834.68 for Aksa Energy Co. GH. Ltd, GHc 9,421,101.77 for Ghana National Petroleum Corporation. The five companies respectively owe the nation a tax liability of GHc61,428.08, GHc 238,247.33, GHc416,699.17, GHc1,021,482.01 and GHc3,824,318.67.
Conversely, Magydom Enterprise was granted exemption by the Ministry of Food and Agriculture for the purchase of fishmeal with a duty rate of 10 percent which was not paid. There was also no approval from Ministry of Finance and Parliament, according to the report. This cost a CIF value of GHc49, 240,007.94 with a tax liability of GHc4,578,946.14
The six companies in total, incurred a CIF value of GHc 62,862,767.82 and a tax liability of GHc10,141,121.40 as a result of exemptions granted by the GRA.
The report said the practice where exemptions are granted without recourse to Parliament exposes the state to the risk of revenue losses.
It therefore urges the Sector Commander to ensure strict compliance with the provisions above to eliminate a recurrence.