Auditor General to surcharge GRA officers for unlawful tax exemptions

The Auditor-General, Mr Daniel Domelevo has said his outfit will surcharge guilty officials of the Ghana Revenue Authority (GRA) who have granted tax exemptions and waivers to companies without Parliamentary approval.

Addressing the media at a symposium on the 2018 Auditor General’s report in Accra, Mr Domelevo said, “No explanation whatsoever, will be accepted from the GRA as to why those exemptions were granted without Parliament’s knowledge”.

“The way forward is that we’ll disallow and surcharge the officers who granted the tax exemptions which has caused financial loss to the state.

The constitution, under article 187 (clause 7iii) states, the Auditor General may disallow and surcharge persons if a loss or deficiency is suffered by the government on the negligence of such persons.

Instructively, Mr Domelevo noted the only excuses his outfit will accept for anomalies of tax exemptions as granted to companies by the GRA, must be those backed by law and not based on someone’s illegal orders.

The GRA 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 empowered 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.

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.”

For instance, 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; and GHc 9,421,101.77 for Ghana National Petroleum Corporation. The five companies respectively owe the nation a tax liabilities of GHc61,428.08, GHc 238,247.33, GHc416,699.17, GHc1,021,482.01 and GHc3,824,318.67.

Similarly, 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.