Ghana lost 74 million pounds between 2005 and 2007 to the European Union (EU) as a result of tax avoidance by some multinational companies, a study has revealed.
According to Action Aid Ghana, a civil society group, schemes such as transfer mispricing, thin capitalization, income conversion among others used by the firms in transferring money from Ghana to their respective countries was legal but unethical.
Emmanuel Badu Addo, Finance Director of the UK-based organization, said transfer pricing and its implications for a developing country like Ghana which struggles to raise revenue through taxes to meet its expenditure were injurious.
Highlighting the effects of aggressive tax avoidance schemes, Mr. Badu Addo mentioned the impact as loss of tax revenue which hampers economic development and poverty alleviation, among others.
According to him, it weakens organized labour to due to the fact that staff do not receive the right wages and salaries and also reduces tax justice.
Ghana is able to raise 12.5 percent taxes of Gross Domestic Product (GDP) compared to 34.8 percent in developed countries. And Mr. Badu said if the gap is breached, many developmental projects can be undertaken at the district assembly and municipal levels.
Vitus Azeem, Executive Secretary of the Ghana Integrity Initiative, who spoke on why tax justice matters, said the lax in the tax system is as a result of leadership, adding “The problem has to do with management and not the tax system itself.”
He called for enforcement of the law to ensure people pay taxes.
On whether mining companies are supposed to develop mining communities, he noted that it was the duty of the government to develop the communities.
He added that it was about time people who can afford to pay for certain things do so.
On the way forward, the proponents, Ghana Integrity Initiative, Christian Aid and Action Aid Ghana, stressed the need for Ghana to double its tax revenue by tackling tax evasion.
They called on civil society and the media to work closely to prevent transfer pricing, among others.
The tax system in any country reflects the social, economic and political objectives of government.
Source Daily Guide Ghana