A notable tax expert and Director of Ali-Nakyea and Associates, Dr. Abdallah Ali-Nakyea has argued that the highly-publicized tax disputes between the Ghana Revenue Authority (GRA) and some multinational firms will not damage the country’s reputation as a coveted investments destination, rather, if handled well, can bolster investor confidence that the country’s tax administration and laws are working.

Recently, the GRA came under spotlight after stating that an audit of the South African telecommunication firm – MTN, revealed that the company under-reported its earnings by up to 30 percent over the 2014-2018 period – leading to fines and fees totaling GH¢8.2billion. The case was however withdrawn after MTN communicated its intention to challenge the charge.

This called for a lot of reaction from people when it emerged shortly afterward that the local arm of petroleum heavyweight Tullow Oil had taken up a case with the GRA at the London-based International Chamber of Commerce over two elements of a recent tax evaluation, which amounted to US$387million plus penalties.

Tullow argued that the charges were a violation of its rights under its petroleum agreements. Other companies, including Goldfields and Kosmos Energy, also cited similar cases they experienced with GRA.

However, Dr. Ali-Nakyea averred that the tax audits and their disputations are part and parcel of tax administration in any jurisdiction and despite being high-profile, as long as these incidents cannot be proven to be targeted witch-hunting of foreign firms, there should be no cause for alarm.

“It is well within the rights of the tax body to confirm or otherwise the operations of an entity vis-à-vis what has been filed as tax returns; and part of this process includes provisions for objections to be raised on any assessment, in addition to dispute resolution procedures. So far, we have not seen an act of general application to a class of companies, especially multinationals. Everyone is subject to an audit and has a right to challenge the results.
“I do not think it is an issue for which investors should be scared or reconsider their positions in the country. I believe strongly that even as some foreign companies are folding-up and leaving, others are hurriedly coming in – which is common with every investment space. Most of those leaving are in trade, which has been altered by the pandemic and technology. That has nothing to do with the GRA. We do not see anything similar with mining and other firms. It would make more sense to resolve whatever disputes exist.”
Dr. Abdallah Ali-Nakyea

The Formation Of ITAB Is Enough To Give Investors Confidence Amidst Dispute

Responding to concerns that foreign firms could reconsider their position in the country on the back of the tax disputes, Dr. Ali-Nakyea noted an amicable solution by stating that the matters of contention will firm-up investor confidence that systems and laws within the country are working.

In his explanation, the tax expert disclosed that the Independent Tax Appeals Board (ITAB) establishment will deepen tax administration in the country and engender confidence among taxpayers.

“With inauguration of the board, which is constituted of seasoned professionals across law, accounting and taxation, we now have an added layer of oversight that will look at these objections between taxpayers and the GRA in a more dispassionate manner. If anyone feels they have been treated in a manner that is not impartial, the ITAB is there as well.
“In any case, this should give investors more confidence that an independent body is there to resolve issues which might be had with the GRA before going to court. Ultimately, some of these issues are simply a matter of interpretation.”
Dr. Abdallah Ali-Nakyea

He added that it would be wrong to treat GRA’s withdrawal of a charge for further review as a hurried retreat, explaining that keeping the initial case untouched while a review is ongoing would lead to accumulated interest and penalties against the entity.

“To say that I am going to review an earlier assessment, so it is being withdrawn and I am issuing a discontinuance notice as I address your concerns cannot be considered as back-tracking.”
Dr. Abdallah Ali-Nakyea