Government has indicated that it has uncovered blatant unlawful activities in the country’s tax exemptions regime in recent times.
Kweku Kwarteng, Deputy Minister of Finance, who disclosed this to the media in Accra Monday, said: “Some importers who do not have exemption status take unlawful advantage of the consignment arrangement in our import regime to consign their imported goods to exemption holders as though the goods were for the exemption holders.”
Noting that such importers do this with the connivance of some senior officials in the exemption holding company, he said once they were compelled to pay the duties and taxes upfront, they protested vehemently against paying the refund into the accounts of the exemption holding company.
“Obviously, the consignment of the goods to the exemption holder had unlawful intent to evade import duties.
Another discovery
“We have also discovered especially in the importation of petroleum products that some companies that have import duty exemption have found clever ways of extending that exemption to cover domestic taxes as well. They get licensed petroleum importers to import these items and place them in bonded warehouses. As we know, taxes on goods that are being warehoused are not paid immediately; they are paid when goods are being cleared from the warehouse.
“Exemption holders then buy these products directly from the bonded warehouses minus the import duties on the items. Thus, the importers of the goods who are not exempted from import duty payment have been able to clear the goods without the payment of the import duty. Here again, asking the importers of the goods to pay duty upfront and apply with justification for refund exposed this malpractice.”
More illegal deals
Mr Kwarteng further indicated that the general tightening of the management and monitoring of import duty and tax exemptions has revealed several other wrongdoings.
For example, he said Non-Governmental Organistiaons (NGOs) and private individuals imported all manner of goods and cited philanthropy in order to benefit from tax exemptions.
“Thereafter, the relief items find their way into commercial markets due to our inability to adequately track the distribution of these items. On rare occasions, part of these exempted goods are given out to the needy and vulnerable groups under the full view of the media as a clever cover for the greater part of the goods that would be sold on the market.”
Comparisons
In the first eight months of last year, total import duty was GH¢5,952 million and total exempts granted was GH¢1,764 million, representing 30 percent of total import duty and taxes.
Comparatively, in the first eight months of this year, total import duty collected has increased to GH¢7,224 million while total exemptions granted have decreased to GH¢1,226 million, representing 17 percent of total import duty and taxes.
“With this track record, it is clear that the results at end-year will show much more improvement. The nation is on course to saving the one billion Ghana cedis programmed for this year.”
Currently, as much as GH¢941 million has been realised.
Discontinuation
Commending staff of the Ghana Revenue Authority’s Refund Office for their support towards this achievement, he said government had decided to discontinue the requirement for exemption holders to provisionally pay the import duty and taxes upfront and apply for a refund later.
Required documents
Henceforth, anyone seeking for tax exemption would, among other things, be required to provide a basis for that; a recommendation letter from the sector Ministry or other agency; a customs classifications and valuation report (CCVR); an import declaration form; a tax clearance certificate; bill of lading; commercial invoices; a packing list; an exemption assessment report and other supporting documents for special cases.
New measures
Effective October 1, this year, the new guidelines will apply.
“Exemption status is not transferable. Under no circumstance shall any person or business be exempted from the payment of any import duty or import tax by virtue of their association or relationship with exemptions holders.
“No imported goods shall be exempted from payment of import duties and taxes unless the original importer of the goods is an exemptions holder or the goods are generally exempted from import duties and taxes by law.
Also, “NGOs and benevolent persons or institutions whose imports are entitled to exemptions under the HS Code shall be required to show an agreement with the relevant sector ministry signed by the sector ministry with facilitation of the NGO benevolent entity.”
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