The Ghana Revenue Authority (GRA) has been impressed upon to re-examine the various mergers and acquisitions that have been completed in the country to reconcile potential revenue losses due to tax evasion.
This is the suggestion from Tax Analyst, Mr. Abdallah Ali Nakyea.
According to him, such commercial activities have been cited as a major contributor to huge illegal financial flows and the resulting revenue losses.
Studies have also showed that commercial activities contribute to between 60 and 65 percent of all illicit financial flows.
This, Mr. Nakyea explains is primarily evident in instances where one company absorbs the operations of another in an acquisition or pull resources together to undertake relatively bigger operations as is the case of mergers.
“We need to really look at the business and business related activities; mergers and acquisitions…So are we looking at all these mergers and acquisitions to see if there is any tax because these are commercial arrangements that have significant impact of revenue losses,” he stated.
The Tax Analyst added, “In the law, if two companies want to merge, the GRA must go in and determine their tax liabilities separately and they pay before they merge. If you wait, they will merge and then the losses will cancel the profits of another and then it will be difficult to determine.”
At least over the last decade, some mergers and acquisitions that have been announced and sealed include the merger of Total and Elf and subsequently taking over Mobil, Ecobank taking over the Trust bank.
Also, Leasing company took over Intercontinental Bank and subsequently Access bank.
The latest in the telecom sector is the proposed merger of the operations of Tigo and Airtel in Ghana.
But Mr. Ali Nakyea tells Citi Business News there is the pressing need for the revenue authorities to reconsider all these activities to avert huge losses in the future.
He insists, that should be achieved with a strict enforcement of Ghana’s tax laws.
“So did they do that or are they doing it? That is all we are asking for,” he remarked.
Meanwhile other activities identified as causes of illicit financial flows in Ghana are criminal activities such as drug trafficking and smuggling and corruption such as bribery & embezzlement.
The two are said to be contributing 30-35 percent and 3 percent respectively.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana