Former Minister of Finance, Seth Terkper says the Finance Ministry’s defence for incorporating Agyapa Royalties Limited in Jersey of the Channel Islands as a means to avoid paying extra taxes on mining royalties is disappointing.
Jersey is a known tax haven and a destination for incorporating companies that want to be listed on the London Stock Exchange like Agyapa Royalties.
Mr. Terkper argued that such a move by government may not sit well with multinationals and other state-owned enterprises who have to operate in Ghana and pay taxes.
“The idea that somehow you want to escape, the most worrisome, Ghana tax and taxes which are paid outside sends a bad signal,” he said in a Citi News interview.
“It doesn’t level the playing field for our state-owned enterprises, some of whom make profits and pay dividends. Secondly, it doesn’t send a good signal to multinationals,” Mr. Terkper added.
The government, at a press conference on Thursday, August 27, 2020, clarified that it opted for a tax haven to ensure that it was not paying more tax on mining royalties than it needed to.
Charles Adu Boahen, a Deputy Finance Minister, said: “It was the most tax-efficient avenue to use.”
“We need to domicile an entity in a jurisdiction that will provide the ability for the royalties not to be taxed again… If we had decided to transfer the royalties in Agyapa that was domiciled in Ghana, we would have ended up in a situation where we would be paying tax twice,” he explained.
About Agyapa Royalties
The government through the Minerals Income Investment Fund (MIIF) set up Agyapa Royalties Limited to monetise Ghana’s gold royalties.
In exchange, the company plans to raise between $500 million and $750 million for the Government on the Ghana and London Stock exchanges to invest in developmental projects.
The arrangement has faced criticism from Terkper’s party, the National Democratic Congress, some Civil Society Organisations and other observers who have called for the arrangement to be suspended.
The Minerals Income and Investment Fund is the sole shareholder of Agyapa Royalties and will also be listed on the Ghana Stock Exchange.