Govt to review laws on tax exemptions

The government is reviewing all laws concerning exemptions granted to importers to ensure that the country gets value for money from such exemptions, a tax policy advisor at the Ministry of Finance (MoF), Dr Edward Larbi-Siaw ,has said.

According to him, the exemptions which cost the government a lot of revenue was denying the state millions of cedis.
Dr Larbi-Siaw was speaking at a forum organised by the Ghana Revenue Authority (GRA) to engage the country’s freight forwarders on the National Single window project.
The event was part of a two-day conference organised in collaboration with the Ghana Institute of Freight Forwarders (GIFF) and the Council for the Regulation of Freight Forwarding in Nigeria CRFFN).
It was on the theme “Intra African Trade—the Role of the National Single Window.”
The conference is aimed at increasing the knowledge of the representatives of stakeholder groups—both public and private— on a wide range of issues which are critical to the Customs Division taking over core functions of valuation, classification and risk management from private Destination Inspection Companies(DICs) while creating a National Single Window for the country.
Statistics from the Ghana Revenue Authority indicated a rise in imports associated with five per cent tax exemption from five per cent last year to 14.20 per cent in the first half of this year while that of 20 per cent tax exemption had also gone up from 20.44 per cent in 2014 to 22.43 per cent in the first half of the year.

Tax exemptions

In 2014, tax exemptions accounted for about 3.3 per cent of Gross Domestic Product (GDP), about GH¢ 3.2 billion, against GH¢ 2.95 billion recorded in 2013
An estimated US$876 million was also lost to direct tax and VAT exemptions in 2012.
The amount, which would otherwise have been channelled into segments of the economy that needed it, mainly goes to foreign companies operating in the country.
According to the World Custom Organisation (WTO), a Single Window Environment is a cross border, ‘intelligent’, facility that allows parties involved in trade and transport to lodge standardised information, mainly electronic, with a single entry point to fulfil all import, export and transit related regulatory requirements.
With the establishment of the National Single Window in Ghana, all shipment activities and transit related businesses will be integrated to achieve efficiency and enable the government to generate more revenue at the ports.

Primary responsibility

Dr Larbi-Siaw reminded freight forwarders that although their primary responsibility was to their clients, they also had a responsibility to ensure that the state got its revenue.
He, therefore, appealed to them to support the country’s revenue collection drive as it was critical to reducing interest, adding that if the country was not mobilising enough revenue, it had to borrow from local banks, a situation that pushed interest rates up.
He described the Single Window system as one that would allow the Customs Division to deliver on their core mandate. The system replaces Destination Inspection.

Ghana to scrap DICs from September 1

Destination Inspection is a concept which was introduced to enhance customs functions as a stop-gap measure while waiting for reforms and modernisation.
Currently, there are five DICs operating in Ghana.
They are BIVAC International, Gateway Services Limited, Ghana Link Network Services, Webb Fontaine Ghana Limited and Inspection Control Service.
In Ghana, the concept of destination inspection was introduced by the government in 2000 to replace the pre-shipment inspection system which involved the inspection of imports before shipment from the country of supply.
Since then, DICs have been mandated to inspect imports at the country’s ports of clearance
But after 15 years, the country has decided to scrap the sstem in principle with WCO regulations which maintains that any country that wants to rely on contracting core customs services to private companies should as well disband its customs administration.
Mr Joseph Agbaga, the President of the GIFF, said the institute endorsed the decision to allow the Customs to take over the work of the DICs.
On the raging controversy regarding the decision by government to pick West Blue Consulting Ltd to implement the multi-million dollar National Single Window and Risk Management System at the ports, he said it was nothing more than the company providing technical support to the Customs Division.

The Nigerian experience

Sharing the Nigerian experience with Single Window, Dr Eugene Nweke , the President of the National Association of Government Approved Freight Forwarders, said Ghana’s decision to scrap the role of DICs was laudable.
He, however, urged freight forwarders in Ghana to use the system’s ability of interactivity, accessibility, predictability, competitiveness, sustainability and reliability as benchmarks, and advise themselves if the system failed such standards

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