The Institute of Statistical, Social and Economic Research says Ghana lost about 8 billion dollars between 2011-2017 in taxes due to the undervaluation of gold exports in the country.
This was revealed in recent research work by the centre themed curbing Commodity-Trade related illicit financial flows, Policy options for Ghana.
ISSER believes that the government can improve the situation in Ghana by strengthening among others the policy, regulation, and information system.
Senior Research Fellow at ISSER and coordinator for the research, Dr Fred Dzanku, urged the government to look into the situation to help increase the country’s revenues.
“What it means is that we can get more taxes from these resources than we are getting now. What it means is that the government can raise more revenue to be able to finance all the projects.”
“We know that we have a huge infrastructural gap we need to fill so we are arguing that this is one of the ways by which we can raise more revenue by strengthening the regulatory system.” He stressed.
This news comes at a time when the government is making frantic efforts to pass the Electronic Transfers Levy which it hopes will rake in about GHS7 billion per annum.
Below is a release on the research work by ISSER
Gold exports: is Ghana earning the expected revenue?
Trade mispricing occurs when one or both trading partners deliberately misreport the value, quantity or nature of goods or services in a commercial transaction. This phenomenon tends to particularly affect resource-rich developing countries, such as Ghana, because of limited regulatory capacity and the actions of multinational companies.
Research by the United Nations Economic Commission for Africa (UNECA) in 2015 estimated that Africa loses about USD 50 billion through trade mispricing. Although the aggregated data and methodology used for this analysis have been criticised, these estimates have led to a significant push by national governments and international policy organizations, like the Organization for Economic Cooperation and Development (OECD), for further research into trade mispricing. Responding to this call, this research project developed a novel empirical methodology to estimate the magnitude of abnormal pricing in commodity exports from 2011 to 2017, based on legal rules of customs valuation and transfer pricing analysis. Our analysis of the commodity value chains indicates that the centralized, regulated trade in cocoa beans than the more decentralized trade in partially refined gold is highly exposed to trade mispricing risks. Some of these risks include transfer pricing risks arising from international operations of multinational firms, artisanal, small-scale and informal firms, regulatory infrastructure for export valuation, and transit trade from neighbouring countries. Our results indicate that Ghanaian exports are undervalued by approximately USD 8.3 billion in constant prices (base year 2011), or USD 3.8 billion in current prices, equivalent to approximately 11%. of the total gold exports between 2011-17. Total estimated tax base erosion from Ghana due to this undervaluation of gold exports equals USD 2 billion in constant prices (base year 2011)
We recommend an improvement in the data collection capacity of institutions engaged in the export of these commodities, such as the Customs Division of the Ghana Revenue Authority, greater co-operation among the various institutions in these sectors to reconcile data collected and to improve the skills of their staff, improvement in tax assessments and payment tracking by national institutions by providing them with information and communication technology tools, especially computers, relevant software and access to critical databases, matching those of private sector actors. Regulators may also consider using our research methods as a means for risk-based selection of cases for customs, tax and transfer pricing audits. For more information visit our project website: www.curbing-iffs.org
Contacts for media requests:
Prof. Gilles Carbonnier, Graduate Institute, Geneva: gilles.carbonnier@graduateinstitute.ch
Dr. Rahul Mehrotra, Graduate Institute, Geneva: rahul.mehrotra@graduateinstitute.ch
Dr. Fred Dzanku, Institute of Statistical Social and Economic Research, Ghana: fdzanku@gmail.com
Dr. Ama Ahene-Codjoe, University of Ghana, Legon: aaahene-codjoe@staff.ug.edu.gh
Ms. Angela Azumah Alu, University of Ghana, Legon: aaalu002@st.ug.edu.gh
