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Economy | Mining

Mining: Ghana loses millions in tax evasion – Report

It has emerged that about 140 million dollars in taxes were lost to the state in the mining sector alone between 2005 and 2007.

In 2012, an additional 36 million dollars shipped abroad mostly to non-taxable offshore accounts on the blind side of tax authorities.

The guilty parties are “big mining companies, using dubious means to dodge taxes”, according to damning conclusions in a report released today by the Tax Justice Network-Africa and Christian Aid.

Programmes Manager for Christian Aid, Ernest Okyere, one of the authors of the report, said these firms always look for loopholes in the system to evade tax.

Using their subsidiary companies, they either over invoice or under invoice depending on which tax is favourable to them, he noted.

 Mr. Okyere told Joy FM’s Top Story on Thursday that the mining firms hid behind transfer pricing to commit the illegal act: transfer pricing is a profit allocation method used to attribute a multinational corporation's net profit (or loss) before tax to countries, where it does business.

He explained that the shifting of profits across borders made it difficult for state authorities to track their activities.

To be able to properly track such activities, it is necessary to involve both local and international efforts, he stated.

Additionally, Mr. Okyere noted that the situation was compounded by the lack of transfer pricing regulations in Ghana to properly monitor the activities of multinationals operating in Ghana.

He therefore expressed appreciation that the regulations have been put in place since last year to deal the situation.

He also lamented the inadequate personnel at the tax audit unit of the Ghana Revenue Authority (GRA). According to him, the staff at the revenue authority are overwhelmed by the voluminous files of companies.

However, the Acting Chief Executive Officer of the Ghana Chamber of Mines, Sulemani Koney said the tax evasion allegations were “unfounded”.

“Where is the evidence?”, he questioned.

Condemning the report, Sulemani Koney noted, “It is easy to make sweeping statements”.

He also disputed the 2012 budget statement indicating that the nation lost $36 million annually from the mining sector through abusive transfer of pricing.

He said the Chamber of Mines wrote to the ministry to provide evidence to the “alarming report”, “but we have still not seen any evidence… they are allegations, which are not based on facts”.

He said government together with civil societies and extractive companies instituted the Extractive Industry Transparency Initiative in 2003, and one of its terms of reference was to find out whether the mining companies were paying what they are expected to pay by law.

“Since 2003 up to 2011, when we had the last report, not a single allegation has been confirmed… they are still untrue and we are waiting for the specific evidence.”

But Ernest Okyere of Christian Aid promised to supply evidence later as requested by the Chamber.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.